Businesses will find it hard to survive in Bangladesh if single-digit interest rates are not made effective as soon as possible.
Most of the commercial banks in the country are charging at a rate between 11 percent and 15 percent on their loans, causing businesses to incur losses.
Calling for reducing the double-digit interest rates to single-digit ones, business leaders have placed 12 demands, including ensuring competitive lending rates in line with the global scenario, addressing infrastructural setbacks, cutting corporate tax rates, rationalising fuel oil and gas prices and increasing cash incentives for apparel and leather industries.
Osama Taseer, the president of the Dhaka Chamber of Commerce and Industry (DCCI), informed journalists about their charter of demands at a Saturday press briefing at the organisation. Entrepreneurs from different sectors, including DCCI leaders were present at the event.
According to the government data, imports and exports have increased and so has the country's economic growth. The country is performing well in various business indices. Nevertheless, businesspeople are not in a good state due to low profits, he said.
This is mainly because banks are charging high interests, plummeting profits to entrepreneurs even though sales have increased in the value of taka, Osama said, adding rising business costs and an unbridled entry of foreign goods are causing losses to local business community.
"Bangladesh is losing the competition to other exporting nations in the global market because of high interests in bank loans," he said.
To implement single-digit lending rates, the government needs to control inflation, reduce interest rates in National Savings Certificate and ensure good governance in the banking sector, suggested Osama.
To provide a long-term financing to the capital market, the DCCI leader proposed ensuring good governance as well as establishing a bond market and promoting mutual funds. The DCCI proposals also include fetching funds for different government projects from the capital market.
Emphasising a facility of collecting easy funds from the stock market for various green projects, businesspeople have urged for effective steps by the Bangladesh Securities and Exchange Commission to allow well-performing small and medium enterprises to also take money from the capital market.
The DCCI also said that the country's apparel sector is lagging behind due to high transportation costs, rising worker wages and increased gas prices. The industry needs additional three percent cash incentive alongside other running facilities.
If the export basket is not diversified, the growth in the sector will not sustain, the organisation said, emphasising the need for reducing over-dependence on ready-made garments.
For this purpose, several other sectors, including drugs, agro-processing and information and communication technology, should be promoted, the Dhaka Chamber said.
In this respect, the Dhaka chamber demanded a speedy completion of the construction of the Active Pharmaceutical Ingredient Industrial Park and the Central Effluent Treatment Plant at the Savar leather estate.
Comparing corporate tax rates of Bangladesh with its competitor countries', DCCI President Osama Taseer said the rate in the country is 25 percent for the listed companies and 35 percent for the non-listed ones.
But, the rates in neighbouring nations and other competitor countries are comparatively low. The government should reduce the tax rates to a rational level, Osama said.
Putting stress on simplification of the tax system, the chamber president said businesses have to undergo added pressure due to five percent advance tax during import.
Besides, they are also harassed for their not getting input tax credit properly, he added, demanding cancellation of the advance tax.