Seminar Recommendation

Bi-annual Economic State & Future outlook of Bangladesh Economy- Private Sector Perspective

Dhaka Chamber of Commerce & Industry (DCCI) organized a seminar titled “Bi-annual Economic State & Future outlook of Bangladesh Economy- Private Sector Perspective” on 23^rd February 2023 at the DCCI Auditorium. The lively event was attended by academics, expert researchers, government high officials, business leaders, civil society members, and media representatives. Barrister Md. Sameer Sattar, President, DCCI delivered welcome address and Keynote presentation. After the presentation, he also moderated the seminar. Tapan Kanti Ghosh, Senior Secretary, Ministry of Commerce, Government of the People’s Republic of Bangladesh graced the occasion as the Chief Guest and Mohsina Yasmin, Grade-1, Secretary (Additional Charge), Bangladesh Investment Development Authority (BIDA) was virtually connected as the Special Guest. Professor Dr. Selim Raihan, Executive Director, SANEM, Syed Mahbubur Rahman, Managing Director & CEO, Mutual Trust Bank Limited and Mohamed Ali Hossain, Director (Finance & Admin), PHP Family remained present as Distinguished Panelists in the seminar. 

S.M. Golam Faruk Alamgir (Arman), Senior Vice President, DCCI concluded the session with remarks to all the guests, discussants, and participants of the event.

Welcome Remarks

•      DCCI believes in an inclusive approach while sharing economic priorities from a private sector development perspective. 

•      DCCI formulates a macroeconomic outlook biannually to share the current outlook of the economy and a set of recommendations for government to support the economy. 

•      Bangladesh has made economic recovery from COVID-19 pandemic stress backed by the firm commitment from both the public and private sector. Now we are facing new economic challenge as Russia-Ukraine war.

•      GDP size of Bangladesh has increased to $460.22 billion economy with 7.10% growth in Fiscal Year 2022 amid the global economic unrest while many developed and developing nations have been struggling with their survival. 

Speech by the Special Guest

·         BIDA is providing end to end online one-stop services. Beside promotional activity and advocacy BIDA is also providing aftercare services.

·         BIDA is planning to provide 150 types of services linked with 40 government and non-government offices. 

·         BIDA currently provides 18 services, but the investors do not come to BIDA and go to the respective authority. This is delaying their business activities.  

·         The investors are requested to utilise the integrated and inclusive OSS platform developed by BIDA as a stepping stone towards the country's investment-friendly ecosystem development.

·         Local and foreign investors can use this platform for timely and cost-efficient services to enhance investment. 

·         BIDA has a Dashboard to monitor the timeline of service. Technical problems are identified and solved by monitoring them. 

·         From BIDA in 96% of cases, services are being provided on time and within 24 hours.

·         Budget proposal will be taken from the stakeholders of BIDA as NBR consider it an important issue. 

Speech by the Chief Guest

·         After 2026, non-tariff facility will no longer exist. Only 27 countries of European union including UK this facility will exist till 2029. 

·         Bangladesh exports medicine to more than 140 countries. Bangladesh will be ineligible for TRIPS facility after graduation which may increase cost of production of medicines.      

·         In DCTS (Developing Countries Trading Scheme) including UK for 25% value addition and in other counties for 30% value addition, we are getting the tariff facility for the new GSP regulation.  

·         After graduation, 50% value addition, linkage with backward Industry, Product Diversification and more Investment will be required to get tariff facility. 

·         Now government is providing tariff facility for importing raw materials but in the woven sector, we do not have 50% value addition despite its promising features.   

·         Besides RMG, we have many diversified and expanded Local Industries but till now we are not capable enough to turn them into the global export market. 

·         Bangladesh Government has taken required initiative to provide Equal facilities to other sectors like RMG. Now corporate tax is equal for all export-oriented Industries and it is 12% for non-green industries and 10% for green industries. 

·         RMG sector gets facility to import Duty-free raw materials and for import machinery equipment 1% duty facility, Leather industries get supervised bond facility but other industries are deprived of these types of facilities. 

·         In this current fiscal year Government has plan to provide subsidy in 43 sectors with BDT 13200 crore. 

·         Cash Incentive will no longer exist after 2026. Government will provide fund for research and will facilitate Industries to import raw materials at zero duty. Rebate of Tax-Vat for electricity, and energy would be applicable.  

·         For Vietnam and India 9.6% duty is charged for export. After graduation, Bangladesh also has to survive globally with the same hard competition. 

·         For importing raw materials, Bangladesh government has formed USD 7 billion export development fund to provide loan to Export oriented Industries at very low-interest. 

·         Government will provide any support to businesses that WTO rules and regulations allow. But businesses need to enhance capacity to remain competitive in the competitive export market.

·         Policies, acts, and regulations need to be reformed. At the same time, we need homework and research for a smooth transition. 

·         Government provides nondiscriminatory subsidy but it should be target-oriented. Micro and small industries are getting benefits from the subsidy. Withdrawal of subsidy will put pressure on common people.

·         The private sector has to take more responsibility as the sector represents 80% of the entire economy. Especially private sector has a large role to play in skill development.

·         Remittance can be boosted only by sending skilled manpower abroad. The migrant workers must be provided with necessary facilitated at home and abroad so that they are encouraged to send remittances. 

·         It is high priority of government to ensure more FDI and to overcome the current challenges.  

·         Based on the analysis of the economic situation, Chambers and Business institutions can express their demand to the government to implement the right policies.

·         Privet Banks should take more responsibilities in efficient lending and recovering NPLs.  

Recommendations

·         A more resilient, consistent and friendly business ambiance is needed that will help us do business and boost investment so that the government will be able to realise more tax revenue in future.

·         The government needs to ensure continuation of policies and the duty structure. Abrupt changes to policies negatively impact entrepreneurs. 

·         Investors invested based on a policy, but it changed. Amid the situation, our investment plan has been stuck. Tax policy should be long-term and short-term basis. The government should inform the business people to bring any major change in the tax policy. 

·         The growth of remittance needs to be emphasised to secure better forex reserves.

·         Good governance and efficient resource management need to be given importance to ensure stability in the financial sector.

·         The presence of a huge amount of non-performing loans (NPLs) in the banking sector raises funding costs for entrepreneurs. Launching political campaigns and ensuring proper punishment for wilful defaulters are needed to reduce the NPLs. 

·         Courts also need to be more active to solve the disputes on financial matter.

·         We need to pay special attention to explore potential local and new export-oriented industries to cater to the growing economic needs instead of relying on RMG industry and remittance inflow.

·         Multiple exchange rates do not help bring in more remittances. If we want to increase remittances, we should take action against hundi. Those who are laundering money abroad do not care about any exchange rate. Although the government is trying to rein in NPLs and stop the money laundering and hundi business, still no progress is seen in this regard. 

·         We need to pay special attention to exploring potential local and new export-oriented industries to cater to the growing economic needs instead of relying on ready-made industries and remittance inflow. 

·         Money launderers are paying more to the expatriates than baking rates. On the other hand, expatriates are also facing hassle when they return to the country. That is why expatriates are not showing interest to send earnings through legal channel. To encourage remittance in the legal channel, creating awareness and proper enforcement of laws are needed to curb hundi. 

·         Bangladesh’s economic growth is driven by the readymade garment and remittance. But to make the economy sustainable, it must have to be diversified.

·         It is important to take necessary steps to ensure the readiness of the private sector and local industries to deal with any external shocks and challenges in future.

·         People are under pressure due to soaring inflation. Our discussion should not be limited to the growth of the economy, rather the mass people should be included in our policy focus. 

·         BIDA should be reformed as service providing organization not only a regulatory organization.

Published on: 2023-02-28