Businesses to get new VAT law provisos soon - Share market analysis of dhaka stock exchange, Bangladesh
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12 January, 2017 10:12 AM Source: The Financial Express Bangladesh
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Steps will be taken to distribute soon the rules of the new value-added tax (VAT) act to businesspeople to forearm them to comply with the law scheduled to come into force in July.

The government will also reappraise the yields on savings tools through which it borrows from the public, as the rates reportedly create some imbalances.

Finance Minister AMA Muhith unveiled the plans Sunday after a leading chamber placed a set of recommendations for economic advances in a meeting with him at his secretariat office.

"I have to see whether we can distribute it immediately so that they get at least five to six months to comply (with the VAT law)," he said at the meeting with the newly elected office bearers of the Metropolitan Chamber Of Commerce and Industry (MCCI), Dhaka.

The minister, however, said the new VAT act will be implemented in phases. "There will be a process of gradual implementation of the act."

MCCI president Nihad Kabir led the delegation. Its vice-president Golam Mainuddin, members M Anis Ud Dowla, AKM Rafiqul Islam, FCA, Francois de Maricourt, and Tabith M Awal were also present and spoke.

Ms Kabir gave a resume on major challenges Bangladesh's economy is presently facing and put forward some recommendations for addressing the challenges.

The minister said some necessary amendments relating to the country's banking sector could not be brought but he was hopeful about placing those in parliament in its next session. There are some legal matters also pending.

Mr Muhith said the news of delay in availability of liquefied natural gas (LNG) by 2018 was disturbing. "I have been promising that by the end of 2018 there will be no crisis of gas supply."

He said the government allowed special economic zones (SEZs) both in private and public sectors. But from private sector only Abdul Monem Ltd came forward to establish SEZ.

The minister said he will look after the matter of storing goods in Dhaka airport in scattered way. "There is scope to look into the matter."

The minister hailed a proposal regarding transportation of agricultural products by railway instead of trucks. "It was not at all in our horizon. We have to think about it."

He said the yield rates on savings certificate will be reviewed soon. "It was supposed to take place much before but could not happen as I was busy." Mr Muhith said the problem relating to insurance industry's management cost was taken seriously and will be solved soon.

Regarding fake and counterfeit goods on the market he said the problem occurred in most of the industrialised countries in their early stages. But it is being eliminated over time.

The minister was hopeful of attaining 7.5 per cent growth in the current fiscal year as projected by the planning commission.

Before that Ms Nahid Kabir in her speech hailed the government as the country's economy made 'commendable progress in the past one and a half decades in terms of steady growth in GDP (gross domestic product), per-capita income, export earnings, worker remittances, foreign-exchange reserves, as well as in poverty reduction and various other social-sector indicators.

She underscored the need for skill development of people who join in the labour force. He also talked about policy continuity, cash incentives for export diversification, and bureaucratic red tape, among others.

In a written memo submitted to the minister she, however, pointed out some weaknesses in the economy, some of which are quite serious. She said the per-capita GDP worth US$1,466 is low even by South Asian standards.

The chamber chief said the domestic savings and investment remained stagnant. Gross investment, currently at 28.7 per cent of GDP, has been historically low in the country.

The country does not see new investment because of weak investment climate. The unemployment rate is high when about 1.8 million people join the labour force every year.

"In order to provide employment to the growing labour force, the investment rate has to rise to at least 35-40 per cent of the GDP," she said. She observed that poor state of infrastructure, weak governance, and lack of policy continuity were vitiating the business environment.

The MCCI president suggested taking steps for achieving 8.0-10 per cent economic growth to achieve Vision 2021/2041 objectives, reduce income poverty through accelerated growth and reduce income inequality, boost agriculture-sector growth, expand the industrial sector, and increase investment in physical infrastructure to improve its quality.

The suggestions for tackling the challenges for further boosting the economy include improving macroeconomic management through fiscal policy reform, reducing interest rates on bank loans, controlling inflation, diversifying export, developing infrastructure, providing adequate power and gas, and making ports efficient. 

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