The American Chamber of Commerce in Bangladesh has recommended that different entities should manage formulation and implementation of the national budget to address significant economic challenges and maintain financial integrity.
The chamber on June 6 made the recommendation in its analysis of the budget for the 2024-25 financial year proposed by finance minister Abul Hasan Mahmood Ali in the parliament on Thursday.
The analysis said that separating creation and execution of the budget would help tackle critical issues such as declining foreign exchange reserves, balance of payment deficits, energy sector imbalances and difficulties in the banking sector.
AmCham highlighted the importance of increasing export revenue and pointed out the significant role of ready-made garment sector, which contributed 10.35 per cent to Bangladesh鈥檚 GDP in FY24.
The organisation also emphasised the role of the country鈥檚 7.9 million small and medium enterprises, which accounted for 37.56 per cent of export GDP.
The chamber opined that expanding of SMEs and diversifying of industries were crucial steps to enhance export competitiveness and it advocated for policy reforms and increased funding for the SME sector.
AmCham called for an adjustment to tax-free income limit for individuals to account for rising inflation. It emphasised that varied tax policies on rates, exemptions and deductions impacted taxpayers differently based on their income levels and sources.
The chamber expressed concern over the National Board of Revenue鈥檚 proposed 15 per cent standard VAT rate for the upcoming financial year, noting that it could raise the cost of imported goods. It stressed the importance of exempting essential products from this VAT to avoid burdening consumers.
Additionally, it pointed out that increases in turnover tax and supplementary duty could affect foreign investors negatively.
AmCham, in its analysis, supported extending tax holiday for ICT sector, believing it would attract more investors and promote growth. It also highlighted the need for a more progressive and automated tax system that used technology and data to improve efficiency and transparency.
The chamber voiced concern over the new 1 per cent duty on capital machinery and parts imported into export processing zones and high-tech parks.
It warned that such changes could discourage foreign investment and shake confidence of both international and local investors in the country鈥檚 economic stability.