Achieving inflation target of 6.5% will be a challenge: BCI

Achieving the targets for inflation and gross domestic product in the proposed budget for the fiscal year 2024-25 will be challenging for the government, according to the Bangladesh Chamber of Industries (BCI).

"The government proposed an inflation target of 6.5 percent for FY25 and a GDP growth target of 6.75 percent. But achieving those targets will be challenging as the inflation rate has been hovering at over 9 percent for the last 14 months," said Anwar-Ul-Alam Chowdhury, president of the BCI, according to a press release.

Chowdhury added that the budget lacked the provisions to keep industries running during these challenging times, especially given that the number of unemployed has risen by almost 1.20 lakh since most factories are operating at 60-70 percent of their capacity due to inadequate supply of electricity and gas supplies.

Data from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) indicate that the export situation is not favourable. At the same time, remittances are also decreasing.

Chowdhury urged the government to reconsider imposing a one percent duty on raw materials and capital machinery imports.

He also expressed concerns about the lack of initiatives taken to ensure the survival of micro, small and medium-sized enterprises (SMEs).

"Despite discussions about climate change and energy efficiency, the budget imposes taxation on locally manufactured bulbs, LED lights, air conditioners, and refrigerators. This move is expected to cause losses to the local industry and put pressure on consumers."

The proposed budget deficit stands at 4.6 percent of the GDP, with around Tk 160,900 crore expected to be financed from local sources.

As such, Chowdhury suggested the government should reduce expenses to decrease the deficit and borrow from foreign sources.

He warned that sourcing large amounts from local sources could eat away at private sector investment.

He also said that the BCI does not support the scheme to whiten black money, which allows people to pay just 15 percent tax to legalise any undeclared income without question, arguing that it discourages and punishes legitimate taxpayers.

Chowdhury further suggested the tax-free income ceiling be raised from Tk 3.5 lakh to Tk 5 lakh considering high inflation and the country's economic condition.

He also recommended that the proposed 2.5 percent decrease in the corporate tax rate should be unconditional to attract more investment.