The government is unlikely to reduce taxes on SIM (Subscribers Identification Module) cards and mobile phone calls with a view to increasing its revenue income, finance ministry officials said.

Besides, the surcharge on personal wealth or assets (movable and immovable) exceeding Tk 20 million will also continue next fiscal alike the outgoing fiscal year.

The official said the revenue earnings of the government from the telecom sector may go down if the National Board of Revenue (NBR) reduces SIM and call rate taxes.

He also said the surcharge on personal wealth or assets will also continue in a bid to increase country’s revenue earnings. The NBR sources said a total 4,567 persons having wealth and properties worth over Tk 20 million gave 10 percent surcharge in the outgoing fiscal, bringing NBR’s income from the segment at Tk 440.62 million.

Recently, the NBR has turned down a proposal of Bangladesh Telecommunication Regulatory Commission (BTRC) to reduce SIM card taxes to less than Tk 500 from existing Tk 600 at a budgetary discussion with finance minister AMA Muhith, Finance Division sources said.

The government may also not reduce the present 15 percent taxes both on call rates and SIM card prices next fiscal. As per NBR statistics, the collection of Value Added Tax (VAT) fell short by Tk 6.0 billion in July-December period of the outgoing fiscal year.

The NBR officials said VAT collection declined in the outgoing fiscal due to reduction of tax on SIM card to Tk 600 from Tk 800 in 2011-12 fiscal year. Last week, country’s mobile phone operators urged the government to reduce SIM card tax in a bid to bringing telecommunication services to the rural segment of people as most of them are deprived of telecom services.

Due to higher taxes on each SIM cards, it is very difficult for the operators to expand their network in the rural areas as their revenue generation is very scanty from the end users, they added.

They also urged the government to bring down the taxes to a reasonable level. As per telecom regulator's data, around 90 million people have been connected with mobile networks till April, 2012.

Chief Communication Officer of Grameenphone, Kazi Monirul Kabir, said: "Government’s revenue earning from the sector will not fall due to the reduction of SIM card taxes, rather it will boost tax revenue due to creation of new subscribers".

The Daily Sun/Bangladesh/ 4th June 2012

Bangladesh's per capita income went up to $848 in the current fiscal year from $816 last year, but is still way short of the $1,006 needed to pull the country up to the middle-income bracket.

The nation aims to reach the middle income country category by 2021, according to government's perspective plan.

The required per capita income at that time would be $1,300, meaning a growth rate of 7-5 percent to 8 percent is needed every fiscal year, said Zahid Hussain, senior economist of the World Bank.

Bangladesh managed a growth rate of 6.3 percent against a target of 7 percent this fiscal year, according to provisional data from Bangladesh Bureau of Statistics (BBS).

The previous year the growth rate was 6.71 percent, signifying the country went backwards with respect to its target of graduating to a middle income country status.

The Daily Star/Bangladesh/ 4th June 2012

The government is likely to target a high GDP (gross domestic product) growth of 7.2 percent in the upcoming fiscal notwithstanding pared-down growth rates in neighbouring India, China and other Asian countries due to the Euro zone debt crisis.

The Finance Division has calculated 7.2 percent GDP growth before revising the country’s export target in the wake of declining export of readymade garment (RMG) products to European Union countries, said a senior official of Finance Division.

He also said the Finance Division is worrying that a lethal cocktail of most of the poor macro indicators and an environment of policy drift for International Monetary Fund (IMF) will cast a dark shadow in the country’s economy.

Next fiscal year’s estimated growth might be sharply eroded by stubborn inflation, projected high deficit along with depreciating currency, the official added.

Another official said the recent slowdown in industrial and export growth due to several internal shocks including energy crisis and lack of infrastructure would hamper the projected economic growth for 2012-13 fiscal.

As per the draft speech of the next fiscal year’s budget, the GDP growth estimate will be 7.2 percent in the next fiscal with a 9.93 percent inflation rate in April.

The world economic growth rate has been estimated at 4.1 percent in 2012 fiscal with the Asian economic growth rate of 7.9 percent. The GDP growth rates in China and India are 8.8 and 7.3 percent respectively during the same period.

Meanwhile, local currency taka has lost 12 percent of its value against the greenback in the last one and a half years. A dollar is currently trading at Tk 81.92.

Dollar was sold at around Tk 69 between 2004 and 2010. Taka was somewhat stable till August 2010, when the local currency started going down against the greenback.

Sources in the Finance Division said inflation was low and growth was on the rise in the first two years of the Awami League-led government.

In the first year of Muhith as a finance minister in fiscal 2009-10, the country’s GDP growth was 6.07 percent, while the rate was 6.71 percent in the following year.

The outgoing fiscal year's growth target was set at 7 percent, which was recently revised to 6.35 percent.

The country’s exports growth fell by 4.60 percent to $1.90 billion in April this year compared to that of the previous month due to the ongoing debt crisis in the European Union countries and downsize adjustment of prices of finished ready-made garment products by international buyers, Export Promotion Bureau (EPB) data shows.

International credit rating agencies have reduced the rating of importer like Spain in the last three years. The general buyers and prominent brands of five crisis-hit countries -- Graces, Portugal, Italy, Spain, and Ireland -- have reduced their import of RMG products from Bangladesh.

Most of the prominent European brands including Tesco, H and M and Carrefour along with some US brands-- WalMart, JC Penny, and Marks and Spencer have reduced their orders due to the debt crisis in Eurozone countries, sources in the commerce ministry said.

The commerce ministry and Export Promotion Bureau (EPB) have already revised the export target for the current year at $26.50 billion. However, the revised target has not been officially disclosed yet, Manoj Kumar Roy, additional secretary for commerce, told daily sun.

The ministry will not calculate the effect of the fall in exports in the outgoing fiscal year’s GDP growth, he added.

As per EPB data, the country’s export growth stood at 8.41 percent in the last ten months of the current fiscal against the full-year target of 15.6 percent. EPB has also set next fiscal year’s export target at $26.62 billion, sources said.

Abdus Salam Murshedy, president of Exporters Association of Bangladesh (EAB)and former president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told daily sun that the country’s export volume declined by one billion US dollar during last ten months due to eurozone debt crisis.

Neighbouring India's annual economic growth rate has been slumped in the January-March quarter to a nine-year low at 5.3 percent as the manufacturing sector contracted and a fall in the rupee to a record low, which suggests the Indian economy remains under pressure in the current quarter, according to the Mumbai Standard Chartered Bank’s forecast.

India's GDP growth rate was much lower than expected and was even below the lowest forecast in a poll that had produced a median of 6.1 percent from predictions ranging between 5.5 percent and 7.3 percent.

The data highlights the unusual degree of weakening of the country's economy, likely driven by poor investment and widening trade gap, it also said.

Rashed Al Mahmud Titumir, chairman of Unnayan Onneshan, a local NGO, told daily sun that the country’s growth rate in the next fiscal would slow down as the government has already entered into a three-year agreement with IFM to get an Extended Credit Facility (ECF) of $ one billion, tagged five conditions including price hike of fuel, fertiliser and electricity. He also termed the deal very risky for the government just before the national election.

Awami League in its election manifesto has pledged a growth rate of 8 percent by 2013 and 10 percent by 2017, which is impossible to achieve mainly due to the harsh conditions imposed by the IMF and the external shocks from the eurozone debt crisis, he added.

Titumir also said the growth rates in Greece, Spain, and Ireland are declining due to IMF directives like austerity measures, contraction of monetary and fiscal policies and floating foreign exchange rate.

Ahsan H Mansur, executive director of Policy Research Institute (PRI), told daily sun that the next fiscal year’s stable growth rate would be sustainable if the government maintains the macro economic stability.

The country’s macro economic stability should be maintained with strong balance of payment and the IMF fund is necessary for maintaining a strong balance of payment” he added.

He, however, said the government is likely to give subsidy in some areas after discussing with the IMF.

The Daily Sun/Bangladesh/ 3rd June 2012

The government allocations for the social safety net programmes (SSNPs), a vital instrument to reach out the hardcore poor, may go down in the proposed budget for the next fiscal year in terms of the budget and the GDP.

As per a Finance Division draft proposal, the government may allocate Tk 212.40 billon to run the SSNPs in the 2012-13 fiscal year, which is 5.83 percent short of Tk 225.56 billion for the outgoing fiscal.

The proposed SSNP allocations would be 11.18 percent of the proposed Tk 1.90 trillion outlay for the next fiscal and 2.04 percent of the GDP, as per the draft paper of the upcoming budget.

The current fiscal’s Tk 225.56 billion SSNP allocations constitute 13.79 percent of the national budget and 2.51 percent of the GDP.

Meanwhile, Prime Minister Sheikh Hasina approved a SSNP proposal of the Finance Division on May 13.

Ensuring social security of the poor and empowering them through employment generation are at the heart of all of the government’s poverty reduction agenda, Finance Minister AMA Muhith said at a recently cabinet meeting on SSNP.

In the meeting he also said the number of the poor lactating mothers as well as widowed, divorced and distressed women beneficiaries will be increased under the SSNPs from next fiscal. But SSNP allocation doesn’t show any sign of raising the number of beneficiaries.

According to the draft paper, of the total SSNP outlay, Tk 173.33 billion will be allocated for SSN programmes while the rest Tk 39.07 billion will be allocated under social empowerment programmes like student stipend and microcredit.

The number of SSNP beneficiaries will increase to 4-4.5 million from next fiscal, draft paper said adding, a fresh survey on beneficiaries will be conducted from next year.

In April this year the International Monetary Fund Mission Chief (Bangladesh and Asia and Pacific Department) David Cowen has urged the government to handle its subsidy burdens carefully and to use subsidy money under SSNPs.

He went further by saying that the government should increase resources for a number of SSNPs as some of them were very effective in poverty reduction.

Dr. Ananya Raihan, executive director of D –Net, told daily sun that high inflation rates, which have hovered above 10 per cent for last couple of years, have definitely caused income erosion poor section of people. So SSNPs are essential to ease that problem, he added.

If the government would not increase SSNP allocations in next budget,it may become politically unwise for it in the long run, he added

Major SSNPs of the government are old age allowance, rural maintenance programme, vulnerable group development (VGD), vulnerable group feeding (VGF), employment generation programme for the hardcore poor, freedom fighters’ allowance, gratuitous relief, allowance for the financially insolvent disabled, open market sale (OMS), test relief and food for work programme.

The Daily Sun/ Bangladesh/ 31- May-2012

Bangladesh Bank Governor Dr. Atiur Rahman presides over a meeting at the BB conference room Tuesday.

Bangladesh Bank has not extended deadline for raising paid-up capital of Non-Banking Financial Institutions (NBFIs) to Tk 1 billion, hence they must fulfill the condition by June 30.

BB Deputy Governor SK Sur Chowdhury said it to the journalists after a meeting with Bangladesh Leasing and Finance Companies Association (BLFCA) yesterday in the city.

President of BLFCA Asad Khan, however, told the journalists that increasing paid-up capital to Tk 1 billion is quite impossible by June 30 as some of NBFIs even have not got SEC approval yet to release IPO.

He also alleged that FIs are not getting loan from the banks at 15 percent interest rate. “Even most of the banks are now charging 18 percent interest on loans.”

Central bank Governor Dr. Atiur Rahman presided over the meeting held at the BB conference room.

BLFCA members and BB officials were also present at the meeting.

“We have not extended the deadline. Hence, the five NBFIs who are yet to increase their paid-up capital to Tk 1 billion must meet requirement by June 30 (today),” said SK Sur Chowdhury.

The NBFIs also need to start working on issuing IPO (Initial Public Offering) in the stock market, he added.

The Central bank deputy governor warned of tougher action against those who would fail to meet the requirements.

Sur Chowdhury said: “BB will be positive in its approach to support bringing back tax exemption facility for Zero Coupon Bond investment if NBR seeks any comment from us.” Commenting that the inflation rate of the country has come down to a satisfactory level, he said if the trend continues till September or October next, the Central bank will think of allowing the NBFIs to resume their home loan window.

The Daily Sun/ Bangladesh/ 30th May 2012