The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has recommended that the government withdraw deposits from banks that do not help implement stimulus packages earlier announced to mitigate Covid-19 induced economic shocks.
FBCCI President Sheikh Fazle Fahim made the suggestion while addressing an online press conference on the proposed budget for the fiscal year 2020-2021 Saturday.
Although many banks have come forward to implement the incentive packages, a few have been showing indifference in this regard, he pointed out. He added, "I propose withdrawing government funds from those banks which do not extend their support in implementing the stimulus packages."
He also called upon the government to consider providing tax holidays to and increasing deposits in those banks which are helping to implement these measures.
The FBCCI president said he would put forward his proposals in writing to the finance minister soon.
Noting that banks are not supporting the coronavirus-affected cottage, micro, small and medium enterprise (CMSME) sector, he said, "Many are of the opinion that providing loans to the SME sector involves higher expenses. This is not true."
He said stimulus packages worth over Tk1 trillion have been announced to help the pandemic-shocked economy turn around. If there is any problem with regard to their implementation, that must be resolved right away, he added.
The CMSME sector is the backbone of Bangladesh's economy, he continued, noting that the informal economic sectors have an 84 percent share in it.
"A good number of banks have come into operation over the past 10 years. Those banks have been asked to bring these enterprises under a formal structure but the banks are yet to reach them," he said.
"Moreover, entrepreneurs in the sector also do not enter the banking system. This is because they buy products from larger firms on credit and pay back the dues after selling the products. As a result, a large portion of the economy has remained informal," he maintained.
The FBCCI president called for providing loans to capable SME-sector entrepreneurs so that they can survive the pandemic shocks.
All stakeholders will have to work for the next three years to bring the informal sectors of economy under a formal structure, Fahim said, adding that various facilities must be provided to these enterprises to that end. "Even if these activities involve higher expenses now, the costs will come down in future once the number of clients increases. For this reason, we are putting much emphasis on the CMSME sector," he explained.
The apex trade body also called upon the government to ease lending procedures while keeping in view the social fabric of the country.
The FBCCI president said, "I propose introducing tariff support, under which all advance taxes will be abolished, VAT and customs tariffs will be reduced and the tax net will be widened to implement an integrated and automated revenue system in the next three years."
The FBCCI president also called for launching probe against some government officials and consultants. He said these people had taken fund from the government but could not ensure an integrated and automated revenue system or did not do that willingly.
Besides, tax net has also not been widened by reducing tax rates. What is more, new complexities are being created. "It is not enviable that 99 percent of the country's people will suffer for the remaining 1 percent."
Pointing to some provisions of the Value Added Tax and Supplementary Duty Act, 2012, -- limiting scopes for tax rebate facilities, allowing seizure of documents without taking permission from higher authorities, increasing effective deposit for VAT appeal to 20 percent from existing 10 percent and increasing the effective deposit for filing a case to settle tax disputes in the telecommunication sector to 50 percent, of which 30 percent will go to officials concerned as incentives -- he said these provisions will create obstructions to ensuring transparency and will encourage corruption.
"If those provisions are not changed, doing business will be more difficult in the country," he concluded.