The Dhaka Chamber of Commerce & Industry (DCCI) on Tuesday urged the government to create a flexible regulation to bring informal businesses into the mainstream for their record and traceability so that access to fiscal benefits can be ensured.
DCCI President Rizwan Rahman said this at a webinar titled "Current State and Future Outlook of Bangladesh's Economy: Private Sector Perspective - July-December FY2020-21."
"Private investment to GDP ratio declined to 12.72 per cent while local and foreign investment declined by 72.16 per cent in the July-September period of FY21," he said.
To facilitate local private sector investment, he suggested reducing corporate tax ratio, increasing investment for infrastructure development, framing sector specific investment road-map and cluster development of backward and forward industries in the SEZs.
According to ILO and ADB, about 1.7 million youth lost jobs due to Covid pandemic. Rizwan emphasised skill development and highly recommended industry-academia collaboration, increasing investment in education and research and development and enhancing technical and vocational education net.
He suggested preparing a long-term plan for product and market diversification. He also urged to allow private sector with easier regulatory process in establishing Effluent Treatment Plant (ETP) in the tannery industry.
"Covid-19 impacted the economy. The GDP value reduced to $330 billion against the target of $343.55 billion with 8.20 per cent growth in FY20. The national poverty rate rose by 9.0 per cent to 29.5 per cent," Rizwan said.
He recommended the automation of taxation system. Considering the impact of COVID- 19, budget needs to be reviewed quarterly and based on this, the priority and allocation need to be re-considered.
In the pharmaceutical sector, Bangladesh has to import 97 per cent of its raw materials. But to be more competitive and have easy access to the international market, he emphasised speedy completion of the API Park which will also reduce 70 per cent cost of import of raw materials.
Regarding CMSMEs, he said that the sector faces challenges in developing their capital, market linkages, product standardisations. Moreover, banks disbursed only 54.13 per cent of CMSMEs stimulus package till December 2020. He suggested giving access to finance to the CMSMEs through SME Bond as an alternative financing.
He also urged for formation of a comprehensive policy framework with revisiting the definition of CMSME.
As the chief guest the webinar, Adviser to the Prime Minister on Economic Affairs Dr Mashiur Rahman said, "We need to be concerned more on how to mobilise the savings which we have. The government is focusing on rural economy and the agriculture sector."
The private sector needs to increase productivity. Bangladesh experienced reasonably good export despite the pandemic and remittance has also increased. "But we need to be more careful about the NRBs returning home from the Covid-hit labour market," he said
He also suggested everyone to be optimistic as the government has come up with various policy support for the private sector. He urged the private sector to utilise this policy regime.
Dr Atiur Rahman, former governor of Bangladesh Bank, said, "We've to have sufficient liquidity in the banks. And the liquidity should go to the productive sector. CMSMEs and agriculture sector should get more priority as these are the lifeline of our economy."
He said revenue generation is crucial for us and for that NBR has to focus on widening the tax net.
"By the end of this year, ICT alone has a target to achieve $5.0 billion in export earnings. But in the financial sector, strong regulatory framework needs to be applied," he mentioned.
He also highlighted generating renewable energy and emphasised ensuring low-cost loan facility for the start-ups and women entrepreneurs.
Dr Ahsan H Mansur, Executive Director of Policy Research Institute (PRI), urged to prepare for the future challenges.
The government needs to give support for the increase of production and employment generation. But to create investors' confidence we need to work more, he noted.
"We need more inputs in the next budget as well. Otherwise, Due to lack of investors' confidence, even in the Covid time most FDI went to China and Vietnam, he pointed out.
He said our Incentive structure should be WTO compliant. Moreover, we need to reduce inflation rate competing with the international inflation rate.
He said Krishi Bank, Shilpo Bank and few of the institutions like these are underutilised. These institutions can be enough for the development of CMSMEs, he said.
Banks should be more flexible in SME lending. Besides, Loan Guaranty Scheme of Bangladesh Bank is not implemented yet. But, resource mobilisation, big data management, less physical control and efficient management system are essential to improve tax-GDP ratio.
Dr Masrur Reaz, Chairman of Policy Exchange, suggested identifying post-covid challenges. The public private dialogue may play a key role.
He suggested that employment protection needs to be addressed in the next level of stimulus.
"We need to bring in trade and investment policy nexus," he said, recommending a predictable revenue generating taxation structure.