Don’t ignore startups in the budget
When the country is struggling with a number of economic challenges, it is not unexpected that the government would propose conservative measures in the new budget to stem the outflow of money. However, it does not explain why such measures would be proposed for startups—a key sector that can give our economy the push it so desperately needs right now. According to a report in this daily, the government not only has no plan to offer relief to the startups in these trying times, but it actually plans to discontinue the existing benefits.
According to the report, startups in Bangladesh have already been feeling the bite of a declining fund flow. Investment plummeted 70 percent quarter-on-quarter in January-March this year due to the ongoing global funding downturn; compared to the same period last year, the decline is even steeper at 82 percent. Under the circumstances, the government is looking to suspend the existing benefits and impose more duties. The finance minister recently announced that investors and developers at the hi-tech parks would no longer be given the 10-year tax waiver on their earnings come the next fiscal year. Moreover, in government hi-tech parks, a one percent duty will be imposed on capital machinery imports. Meanwhile, the government has not addressed any of the concerns and demands raised by the startups. For example, the demand from e-commerce and logistic startups for the withdrawal of the 15 percent VAT on parcel delivery and five percent VAT on online product sales have not been met in the proposed budget.
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These decisions are truly puzzling, especially when we consider the consequences. Industry insiders said withdrawal of the tax waiver would surely hinder the growth of the hi-tech parks as investors—particularly the foreign ones—may get discouraged when they are no longer allowed the benefits. And imposing additional duties will push the cost of doing business upward for the startups. We urge the government to see reason and facilitate the growth of startups, instead of stunting it by employing growth-averse policies. Given the current fund crunch, it could arrange for soft loans on easy terms for startups. It must also come up with incentives that would draw in more investors for the sector. In order to create a smart economy and realise the vision of a smart country, we must smoothen the way for the startups, not create obstacles for them.
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