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May 22, 2023

Focus on crisis management contingency approach: American Chamber of Commerce on proposed budget

The American Chamber of Commerce recommends focusing on crisis management

The American Chamber of Commerce recommends focusing on crisis management contingency approach, prioritising expenditures and policy continuity on key procedural matters in a few sectors.

The AmCham made the recommendation as the government of Bangladesh aims to attain a 7.5% growth rate in FY24 containing the inflation during these difficult times heading for a new government to take over believing in "Across the long journey of development, towards Smart Bangladesh," said the AmCham in its budget response.

The sectors the AmCham gave recommendations for are:

Foreign Exchange Reserve: No significant economic growth is conceivable without a sustained Foreign Exchange reserve growth. Hence, instead of gross import ban, the government should speed up the foreign-funded projects' implementation and reconsider own funded projects having a sizeable import component ensuring safeguard against economic shocks caused by volatile energy inputs and help finance balance- of-payments deficits.

Alternatives to increase export revenue: Instead of traditional heavily RMG dependent export basket, policy support should be extended towards business/industry for effective implementation of existing policy, create a user-friendly process and further allocation national funds to enhance this potential source.

Import Duty and minimum tax: Considering the advance tax as minimum tax paid by an industrial undertaking at import stage on raw materials in certain industries and the fixed (5%) minimum tax on the gross receipt would be detrimental for the existing investors, hence request to revisit this proposal for the best outcomes for businesses and consumers alike.

Renewable energy to offload existing supply chain: Investing in renewable energy not only benefits us environmentally but also contributes to economic growth through job creation, market expansion in related industries supporting clean-energy technologies. AmCham recommends favorable immediate initiatives.

Income Tax policy diversity: Diverse policies in individual tax rates, exemptions, deductions, and credits affect different taxpayers based on their income levels, types of income sources, and other individual circumstances. AmCham strongly recommends the National Board of Revenue (NBR) to adopt automation in all possible levels at the same time to focus more on expanding Tax net. The organisation suggests introducing the e-payment and e-TDS system and Digital Payments incentives to ensure accountability and transparency throughout the process.

Reducing per capita liability: It is a critical issue for developing countries that rely on external borrowing to drive economic growth. AmCham recommend adoption of prudent debt management strategies that promote transparency, accountability and fiscal discipline.

Focused project on Climate vulnerability: All projects going anti-environment and against the notion of green economy should be abandoned. AmCham strongly recommend creating budgetary allocation for such projects on climate vulnerability since Bangladesh is already experiencing erratic weather patterns.

"In another note, we truly appreciate and like to show our sincere gratitude for developing new and improved Logistics infrastructure with the support of Logistics Infrastructure Development Working Committee (LIDWC) from Prime Minister's Office. We recommend to expedite the building of Dhirasram ICD boosting Dhaka-Chattogram railway communication to reduce the pressure on the highway and shift the pressure on Kamalapur ICD, the heart of Dhaka city. Logistics industry holds an important key for our economy attracting domestic and foreign direct investment (FDI), which is growing at a high pace," said the organisation.

"Investing in a smart Bangladesh is not just an economic imperative, it is a moral one. By prioritising the right budgetary allocations in infrastructure, education, technology, energy, and social inclusion, we can build a sustainable, better future for all," it added.

AmCham believes budget execution is what matters in the end and should be measured for quantity and quality.

American Chamber of Commerce / Proposed budget