Planning Minister MA Mannan urged the private sector entrepreneurs to seize the opportunity of boosting export and expanding trade in the medical and textile sectors in the wake of novel coronavirus (COVID-19) pandemic.
He made the call while addressing as the chief guest a webinar on “Bi-annual Economic State & Future Stance of Bangladesh Economy: Private Sector Perspective”, organized by the Dhaka Chamber of Commerce and Industry (DCCI).
DCCI President Shams Mahmud presented a key-note paper at the webinar.
Terming the new budget as more ‘business friendly’ compared to those in the past, Mannan said the budget has increased a lot of facilities, including reduction of the corporate tax rate alongside facilities for individual taxpayers. “You’ll get much more facilities in the coming days,” he added.
He also underscored the need for joint endeavors by the public and private sectors to face the COVID-19 situation.
The Planning Minister said the private sector is taking the lead role in many countries to develop infrastructures. “We’ll also have to go to that direction,” he added.
He urged the private sector entrepreneurs to come up with bigger investments for the country’s power, communication, medical and other infrastructural development.
Stressing the need for enhancing the use of technology, Mannan said much more digitalization is now the demand of time in the banking sector.
He said Bangladesh would need to attain observer status to boost its trade among the ASEAN countries side by side it needs to boost its trade and commerce with the neighboring countries.
The planning minister urged all to remain alert so that the image of the country is not tainted due to the unholy work of anyone.
“Not only the government, the private sector will also have to be much more attentive,” he added.
DCCI President Shams Mahmud said that more focus needs to be given on sourcing funds from external sources reducing dependency on bank borrowing to mitigate the budget deficit.
He also suggested reducing source tax for export oriented sectors to 0.25 percent, saying that the agriculture and agro-processing industries need to be supported and keep functional with strong local-supply chain system to ensure low-cost food security.
Due to COVID-19 impact, Shams said private investment is projected to come down to 12.72 percent in FY2019-20 compared to 23.54 percent in FY2018-19.
FDI inflow in Bangladesh fell to USD2.87 billion in 2019 compared to USD3.6 billion in 2018. In that context, in order to seize the opportunity of investment relocation from China, Bangladesh needs to frame sector specific investment road-map with strategic action plan while corporate tax needs to be rationalized.
Due to COVID-19 outbreak, both demand and supply side weakened the international trade of Bangladesh. In FY2019-20, total export was USD33.67 billion which was 25.99 percent less than the export target and 16.93 percent less than FY2018-19.
In order to boost international trade, the DCCI President emphasized on restoring GSP facility in the USA, eliminating non-tariff barriers with partners through strong diplomatic initiatives, FTA and PTA with potential partners.
According to different international organizations, around 15-20 million people are in the risk of being unemployed due to the pandemic.
Thousands of migrants may lose their jobs and be repatriated to Bangladesh. In this situation, the DCCI President emphasized on ensuring stimulus packages to the labour intensive industries and informal sector.
Moreover, through re-skilling and up-skilling, unemployed migrants can be employed in the agriculture and other local industries, he opined.
Due to COVID-19, international buyers cancelled work orders worth USD 3.18 billion from Bangladesh. Total export of RMG declined by 18.12 percent to USD27.95 billion in FY2019-20 which was USD 34.13 billion in FY2018-19.
On this ground, Shams recommended to reduce source tax from 0.5 percent to 0.25 percent as the world export market is shrinking. Besides, cash incentives need to be rationalized and given in terms of value addition.
Shams also suggested flexible, hassle-free and collateral-free loan disbursement system under stimulus packages. He called for credit guarantee in order to allow access to stimulus packages for CMSMEs.
Chairman of Policy Exchange Dr. M. Masrur Reaz emphasized on survival, resilience and revival for economic recovery.
He suggested to take short-term and mid-term strategies to bring the economy back from the COVID-19 situation. He also urged the government to reduce corporate tax, turn-over tax, modernize Companies Act, form policy considering COVID-19 crisis, and create a vibrant bond market for long term financing.
Hossain Khaled, managing director, Anwar Group of Industries and former president, DCCI, said the government’s high bank borrowing may slow down credit flow to the private sector.
“Industries are trying hard to keep the existing employment safe, in that case banks and industries should run hand in hand. We should take more green projects. We have surplus electricity now, introducing electric vehicles may reduce extensive fuel dependency,” he added.
Abul Kasem Khan, chairman, BUILD & former president, DCCI, said how to give the economy a full pace should be the main focus now.
He called for a regionally competitive tax structure for better performance of businesses.
He emphasized on stimulating the informal sector as well as MSMEs ensuring stimulus packages. “We need to be connected with ASEAN and the FTAs should be effective. Investment for research and development in industries should be tax-free,” he mentioned.
Asif Ibrahim, chairman, Chittagong Stock Exchange Ltd. & former president, DCCI, said in Bangladesh GDP-market capitalization is mere 11.1 percent which is not up to the expected level, whereas it is quite high in our neighbouring countries.
“For long-term project financing, an effective bond market will be a key player,” he said, requesting all commercial banks to inject at least 200 crore taka to the stock market complying with the directives of Bangladesh Bank.
“But, we have shortages of good IPOs in the market, he added. BSEC, DSE and CSE should strengthen their monitoring,” he said.
In the open discussion session , DCCI’s former presidents RM Khan, MH Rahman, Aftab-ul Islam, Benajir Ahmed, Sayeeful Islam, and Sabur Khan spoke, among others.
DCCI Senior Vice President NKA Mobin and Vice President Mohammad Bashirduddin were also present on the occasion.