Old dual economy is back, says CPD's Mustafizur

Income inequality and discrimination in Bangladesh have risen to such levels that it seems there is a dual economy at play and because of this, building an inclusive economy is not possible, said a noted economist during a discussion organised by the Economic Reporters' Forum (ERF) on Sunday (7 April).

"During the Pakistan period, a dual economy was also in place in this land, and our freedom fighters have laid down their lives for a country and for an inclusive economy," said Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD).

He made the remarks while speaking at a discussion on "Macroeconomic Stability and Next Budget" organised by the ERF at its office in Dhaka. State Minister for Finance Waseqa Ayesha Khan attended the discussion along with businessmen, economists and journalists. ERF President Mohammad Refayet Ullah Mirdha chaired and General Abul Kashem moderated the discussion.

Saying that the old dual economy is back, he pointed out the escalating rate of unemployment in the country, citing that a staggering 25% of fresh graduates from national universities remain unemployed. 

He also suggested that the government increase direct tax for the wealthy to alleviate the burden of tax on lower-income individuals.

He said, "Considering the difficult times during the Covid-19 pandemic, the highest rate of income tax was lowered to 25%. But now, though the pandemic has ended, the rate was not revised to the previous high of 30%."

It is expected that the government will increase the direct tax again in the upcoming national budget for the fiscal 2024-25, he added.

Speaking at the programme, Anwar Ul Alam Chowdhury Parvez, president of Bangladesh Chamber of Industries (BCI), voiced concerns over the soaring cost of doing business in the country, highlighting the increased price of gas, by nearly 178%, and the inadequate energy supply to industrial units.

"Many micro, small and medium enterprises used to offer jobs to the people, but now they eventually turned into job seekers as they cannot run their businesses because of the high costs," he elaborated. 

He also mentioned the harassment businessmen face from customs and other branches of the National Board of Revenue. 

The BCI president further said "Give the real export data. The Export Promotion Bureau is stating the earnings to be $32 billion and the customs department is saying the amount is $26 billion."

Shams Mahmud, managing director of Shasha Denims, said that there are 750 small and medium sized garment factories which may face big challenges because of the rising cost of doing business. 

He suggested the government negotiate with India so that the local exporters can send goods while enjoying duty benefits after LDC graduation.

Former Senior Finance Secretary Mahbub Ahmed suggested the government raise the allocation in sectors like health, education, agriculture and skills development.

Ayesha Khan said the private sector is very important and the government always consults with the private sector stakeholders before taking decisions.

She said, "The government has been taking opinions from the private sector for preparation of the next budget. It has also been paying incentives to different sectors for many years and some of the sectors are now capable enough to be more competitive and they may not need incentives anymore."