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DCCI, Ficci term budget industry-unfriendly

Doubt investment growth

Staff Correspondent
Chiefs of two key chambers at a meeting yesterday said as the proposed budget for next fiscal year (FY) is 'not industry friendly', they have reasons to have reservations about feasibility of the Board of Investment's (BoI) target to bring about a significant increase in private investment.
The business leaders -- Dhaka Chamber of Commerce and
Industry (DCCI) President Fazle RM Hasan and Foreign Investors' Chamber of Commerce and Industry (Ficci) President Mahbub Jamil -- were responding to BoI Executive Chairman Mahmudur Rahman's disclosure that his board projects an average annual increase of Tk 12,000 crore in private investment in the next three years.
The meeting on ‘Investment Trend and Budget 2004-05,' sponsored by the BoI, was organised by
Economic Reporters' Forum (ERF) at a city hotel.
In line with the millennium development goal, Mahmudur Rahman told the meeting the BoI also aims to increase the contribution of private investment to the gross domestic product from the current 17.5 percent to 20 percent by the next three years.
He said the board targets to increase private investment by Tk 8,000 crore in FY2004-05, to be added to the Tk 58,090-crore total investment figure of the current fiscal. The target for FY06 is to increase investment by Tk 12,000 crore and for FY07 by Tk 16,000 crore.
As the rationale of the target, the BoI executive chairman cited 'the investment success' of the recent years. He said the country received double investment in the last three years compared to that in the previous three.
In their address, both the chamber chiefs praised the government for proposing increased facilities for the agriculture sector, but they also pointed out the budget's discouraging aspects to industry.
They felt the proposed 7.5-percent import duty on raw materials and 25-percent on finished goods, besides withdrawal of tax holiday, will make it tough for the
BoI to achieve its targets.
The Ficci president said the reduction of duty on finished goods from 30 percent to 25 percent would hurt the local industries and halt the growth of assembling industries, as imported finished goods would flood the market.
Jamil said all the economies developed in manufacturing sectors started growing with assembling industry and, after gaining the necessary technical know-how and expertise, they went for manufacturing.
In his speech the DCCI president demanded continuation of tax holiday, as he said, "withdrawal of tax holiday will discourage new investment."
Fazle Hasan also pointed at poor law and order, and inadequate infrastructure and utility facilities as the other major hindrances to boosting investment.