Initiate steps to end forex shortage: FBCCI

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has urged the government to initiate steps in order to address the foreign currency crunch.

The economy is confronted with a number of challenges, including high inflation, foreign currency shortage, sluggish growth of remittance and a narrow export basket.

"Take steps to address the shortage of foreign currencies," said the FBCCI, recommending taking initiatives through consultations with stakeholders.

The apex chamber made the appeal in its proposals submitted before the finance minister recently over tax and other budgetary measures for fiscal year 2024-25 beginning from July.

Bangladesh has been experiencing the forex crisis owing to a sharp depletion of reserves driven by escalated imports, lower than expected exports and remittances, and alleged money laundering.

The reserves stood at $19.45 billion on March 27 whereas it was more than $41 billion two years ago.

The FBCCI urged the government to remain cautious when taking up projects based on foreign finances. "Strong political commitment will be necessary to prevent money laundering."

It called for either forming a banking commission or bringing about reforms in the banking sector to ensure discipline and good governance in the financial sector.

The apex trade body said the budget for the next fiscal year should prioritise steps to reduce the cost of doing business, avoid loans having tough conditions, and develop an effective infrastructure.

The FBCCI proposed ensuring coordination among customs and VAT departments and bring them under an integrated automation process.

"There is a lack of coordination among various wings of the National Board of Revenue."

Businesses have to provide information pertaining to tax, VAT and customs separately and so it is necessary to bring the three wings under automation, said the FBCCI.

It also said there is a provision of rewarding customs, VAT and income tax officials. As a result, the law is abused and many honest businessmen suffer.

"Therefore, the tradition of rewards should be cancelled to curb the discretionary power of officials."

The trade body urged the NBR to withdraw advance income tax and advance tax on imported raw materials and intermediate goods used for industrial production.

It suggested limiting the application of supplementary duty, except for luxury goods and a select list of items to safeguard the interest of the country.

The FBCCI urged the NBR to ensure tax compliance of the nearly one crore registered taxpayers. At present, roughly 35 lakh taxpayers file tax returns.

The trade body also lamented a lack of automation with regard to income tax.

"Businesses have long been demanding for online filing of returns and assessments of taxes. Though there have been some improvements, a full-fledged automation is yet take place."