Let the economy keep sailing amid war by adjusting fiscal measures: Businesses

FBCCI President Md Jashim Uddin (from left), BGMEA President Faruque Hassan, and BKMEA Executive President Muhammad Hatem

As the economy passes through a crucial transition, the trade leaders want the government to exempt tax, AIT and hike supply of energy to the industries to increase exports that will fetch more foreign exchange, especially dollars.

After the Russian invasion of Ukraine this February, the country’s major export market EU started pulling their work orders back because of their perilous economic states, pushing Bangladesh’s apparel exports to fall.

As the global economy has simultaneously been battered by Covid-19 pandemic and Russia-Ukraine war and rise in fuel oil prices, Bangladesh’s incoming remittances also fell.

The trade leaders think, if they could export the optimum volume of products to the international market, the dollar crisis could be resolved.

Though the work orders for apparel and other merchandise have dropped, garment and yarn manufacturers cannot process the existing orders because of inadequate energy supply.

This is why the trade leaders urged the government to make an adjustment to its fiscal policy.

“Considering the war, the government should exempt tax, AIT from export-oriented manufacturers,” Faruque Hassan, president of Bangladesh Garment Manufacturers and exporters Association (BGMEA), said on Monday.

He believes, it appears that the government will lose a portion of revenue anyway, but if the export keeps sailing, the government will gain more, and the dollar crisis will be minimised.

He further said, “Currently fuel oil and LNG prices have dropped to an affordable level. To support our manufacturing sectors, the government should start importing LNG now.”

Another trade leader also urged the4 government to take affirmative action for the export-bound industries.

“This bad time (less work order) will be over but we are worried about power and gas crises. If the government supplies these two things, exports will increase soon,” Muhammad Hatem, executive president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said.

Experts also look optimistic.

“There is nothing to be worried about. The crisis-time will go away next year,” Khondaker Golam Moazzem, senior research fellow of CPD, said.

Apex trade body of the country, the Federation of Bangladesh Chambers of Commerce and Industry also cries for gas loudly.

Its president Jashim Uddin said, “We need gas and power right now for our survival. The price of LNG has gone down. And, by importing fertiliser, the government can divert the necessary gas to the home industries.”

Bangladesh’s prominent energy expert Prof Izaz Hossain said, “To ensure fuel to the industries will lead the country to an immediate solution to the dollar crisis. The depressed economy also will get support if we can increase exports.”

Some put emphasis on diverting the market as the European economy has slowed down.

“We are trying new non-traditional markets to increase exports. If we increase exports, dollars will come to the country that might be used in imports,” Shahidullah Azim, vice president of BGMEA said.

According to the EPB, exports dropped by 6.25 percent to $3.90 billion in September while major forex earner garment shipment fell by 20 percent in October, exporters estimated. From October 1 to October 28 October, apparel trade fetched $2.4 billion.

However, during the first quarter of the new fiscal year, Bangladesh’s apparel aggregated $10.27 billion and made 7.52 percent year on year growth.

Courtesy: The Business Insider Bangladesh