Textiles, RMG neglected in budget
The textile and garment sector, which earns the lion's share of export proceeds, has been left neglected in the proposed budget, according to Shams Mahmud, a former president of the Dhaka Chamber of Commerce and Industry.
"Overall, the proposed budget has failed to address the burning issues at hand. But we did not expect it, especially because we have seen how effective a role the prime minister has always played in supporting the private sector," he said.
Mahmud, also the managing director of Shasha Denims Ltd, was sharing his thoughts on the proposed budget for the fiscal year of 2023-24 during an interview with The Daily Star on Thursday.
"Considering the current scenario worldwide, we expected a reduction of tax deducted at source from 1 per cent to 0.5 per cent, which was absent in the proposed budget," he said.
Even the continuation of the 15 per cent tax payable by the textile industry on their income, which is lower than that for most sectors, will have no benefit.
This is due to the fact that most units are now incurring losses for a reduction of work orders against the backdrop of inadequate gas pressure in the supply lines alongside frequent power cuts, said Mahmud.
"Also because of a rise in spare parts consumption, we expected a waiver of value-added tax and taxes on domestically produced spare parts."
"This would have helped support the local industry, enabled its development into an import substitution industry, and saved foreign currencies. Unfortunately, there was no such offer in the proposed budget."
A tax on the import of spare parts by entities inside the export processing zone is still in effect, which also should have been withdrawn considering the present economic slowdown, Mahmud said.
"There has been no allocation for research and development for the textile and garment sector at all, which we had expected as we are striving to produce more value-added products."
No benefits were offered to factories which are investing in being environmentally-friendly by reducing their carbon footprint alongside water and electricity consumption, added Mahmud.
"A lot of our traditional export markets will not be readily accessible as Bangladesh is going to graduate from the least developed country category."
"Moreover, there will be lesser access to low-cost concessional funding as we walk down this path of graduation."
According to Mahmud, Bangladesh has been caught up in a volatile international business atmosphere this year owing to high-interest rates in the US, the Russia-Ukraine conflict and recessionary fears gripping the world.
Internally, the economy and businesses suffered from high inflationary pressure and a lack of private sector credit growth, he said.
He had apprehensions over the government increasing its borrowing target from internal sources like the banking sector, saying it would further squeeze private sector credit growth.
"The uncertainties over power supply have detrimentally affected the cottage, micro, and small enterprises."
Input costs have gone up alongside the necessity for machinery spare parts as those are breaking down because of the erratic power supply. These costs are ultimately passed down to the consumers, which is creating inflationary pressure, he said.
The depreciation of the taka against the US dollar came as a shock to the economy, which is now taking a toll on the common people and the middle class whose incomes are fixed, he said.
"We had hoped that the just announced national budget would address all these points and show us a clear strategy to overcome all these issues."
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