The government on Monday approved a proposal to form a Tk 1 billion fund to provide technical assistance to the projects being implemented under public-private partnership (PPP).

The approval came at a meeting of the Cabinet Committee on Economic Affairs with Finance minister AMA Muhith in the chair.

The meeting also approved a set of guidelines, prepared by the Finance Division, for some mega projects including deep-sea port, metro rail and elevated expressway.

Besides, the cabinet body also okayed a proposal to spend up to 30 percent of the projected expenditure of Viability Gap Funding (VGF) under the PPP projects.

The government, however, failed to spend any budgetary allocation for the PPP projects in the last three fiscals.

“Since coming into power, the government has allocated more than Tk 35 billion for PPP projects. But in the last three and a half years, the finance ministry failed to spend a single taka from the fund other than making a policy and setting up an office in this regard” a finance ministry official said.

According to the draft technical assistance guideline, the revolving fund will be managed by the PPP office. Financial assistance from development partners will be accepted in the fund.

The assistance to be given to PPP projects will later be deducted partially or in full from successful bidders.

The technical assistance may be used in pre-feasibility and detailed feasibility studies, purchase processing, tender document preparation and evaluation, completing technical, financial, commercial and legal assistance activities of the project.

Besides, the VGF fund will be released on the basis of the equity of private entrepreneurs and will be given on a month, quarter, half-year and yearly basis.

According to the draft guideline, the VGF assistance will be given to only those projects which will be completed on build, operate and transfer basis.

For getting such assistance, the bidder must be selected through competitive bidding and the economic rate of return of the project must be equal or more than the level fixed by the PPP unit of the Finance Division.

The Finance Division will change the level time to time through issuing circulars.

An official of the Finance Division said the guidelines were prepared after consulting with the technical assistance team of the Asian Development Bank, taking opinions of the stakeholders and reviewing the guidelines of different countries.

The government earlier adopted a public-private partnership (PPP) policy. As per the policy, a separate PPP office was established under the Prime Minister's Office. A chief executive officer was also appointed to the PPP office.

Besides, a PPP unit was formed at the Finance Division to facilitate technical assistance the PPP projects.

The government launched the PPP initiative in fiscal 2009-10, allocating Tk 25 billion in the budget in a bid to involve the private sector in big infrastructure, power, and energy projects.

The cabinet committee also gave its nod to a proposal of commerce ministry to exempt Trading Corporation of Bangladesh from public procurement rules for another three years to facilitate import of seven essential items quickly to keep the prices stable.

The exemption will allow the state-run TCB to import edible oil, sugar, pulse, gram, onion, date and baby foods quickly without following the mandatory PPR to speed up the process of market intervention ahead of the Ramadan, officials said.

TCB has been enjoying such exemption since 2009, which will expire on May 26 this year.

The Daily Sun/ Bangladesh/ 15th May 2012

Finance Minister AMA Muhith yesterday signalled a further hike in fuel and power prices in the next budget to reduce the subsidy burden on the government.

Muhith sat at a pre-budget meeting with the editors and other senior journalists of the print and electronic media at his ministry.

“A price adjustment is a political decision of the government but the timing will be fixed after considering political environment, summer and irrigation season,” said Muhith, when asked about the timing.

The government had to borrow from the banking system to subsidise fuel oils, which eventually increased inflation, Muhith said.

“Subsidy cuts will now tackle that,” he said.

The minister replied to the editors' queries on amnesty for black money, reducing tax on newsprint, and the World Bank's corruption report about the Padma bridge project.

In the current fiscal year, the government hiked fuel and power prices several times, resulting in inflation, especially non-food inflation reaching double digits.

But the finance minister told the editors that subsidy cuts would tame inflation and it may come down to 7.5 percent next year.

Inflation comes down to the single digit level not only because of cuts in subsidy but also due to an improved supply situation and an increase in income, Muhith said.

About amnesty for black money in the next budget, Muhith said the government has not decided on the matter yet.

On foreign aid, Muhith said the government failed to utilise foreign aid due to its inefficiency.

“Though commitment increased, we have not been able to spend the fund. It is a failure,” Muhith said.

In the next budget, steps will be taken to increase efficiency, he said.

Responding to the editors' queries about good governance and decentralisation of administration, the minister admitted there is politicisation in the administration.

“Personally I feel that finding a solution to this problem [politicisation] is difficult,” he said.

“Change is not possible without changing the political atmosphere,” Muhith said.

On public private partnership, the minister said it is not true that nothing has been done for implementing PPP projects.

He said the power projects have been implemented in line with the PPP model. Various flyover projects are being implemented through PPP initiatives, according to the minister.

The editors strongly recommended lowering tax and duty on newsprint import.

Abdul Qayyum, joint editor of the Prothom Alo, said the cost of production of a copy of a daily newspaper is Tk 20 but it is sold at Tk 8. The cost cannot be recovered from advertisements alone, he said.

Newspapers pay 23.5 percent duty, VAT and advance income tax on newsprint imports. Qayyum proposed a waiver of 3 percent duty and 15 percent VAT on newsprint imports.

He urged the government to consider the recommendation, keeping in mind the media's social contribution.

To a question about US Secretary of State Hillary Clinton's comments regarding Grameen Bank, Muhith said he read about them in newspapers.

He said his position regarding the issue was clear. He dispelled the rumours about the government taking over the bank, and said: "It's a government enterprise, and it is clear who owns how much of the bank."

"Legally, the government of Bangladesh owns 25 percent of Grameen Bank," Muhith added.

Grameen Bank is not the only microcredit providing institution of the country, he said.

Muhith said there are around 3,000 microcredit institutions, many with good recovery rates.

“Microcredit is wonderful, but there is no point in fussing about it,” he said.

Reazuddin Ahmed, editor of the News Today, asked whether a sack full of money recovered by border guards will be included in the revenue earnings. A smiling finance minister said there is no scope to include it in the revenue.

Shah Husain Imam, associate editor of The Daily Star, suggested strengthening the Implementation Monitoring and Evaluation Department for the implementation of the annual development programme.

Moazzem Hossain, editor of The Finance Express; Syed Fahim Munaim, the chief executive officer and chief editor of Maasranga Television; Manzurul Ahsan Bulbul, chief editor of Baishakhi TV; Shykh Seraj, director of Channel i; and Khondaker Muniruzzaman, acting editor of the Dainik Sangbad, were also present.

The Daily Star/ Bangladesh/ 14th May 2012

The International Monetary Fund's loan is a bitter pill, which not every patient can swallow, Akbar Ali Khan, a former caretaker government adviser, said yesterday.

His comments came at a training workshop for economic reporters at Ruposhi Bangla Hotel organised jointly by Economic Reporters' Forum (ERF) and Bangladesh Investment Climate Fund of International Finance Corporation.

Khan, who was a finance adviser, also criticised the government for telling the IMF that the country's economy is under pressure and it needs fund to support the balance of payments.

“When we (economists) said the macro-economy is under pressure, they (government high-ups) said it (our comment) was rubbish. But IMF document shows the economy is under pressure and it will take at least three years to recover,” he said.

Recently, the government has received the first instalment of the IMF's $987 million loan. The former adviser said the IMF's influence on the economy would rise due to this loan.

Khan said the loan is tied with financial and systematic time-bound conditions, including withdrawal of subsidies and supplementary duty on luxury imports, adjusting fuel prices in line with the international market rate and increasing power prices at regular interval.

“All of these reforms are not required at the moment,” said Khan, also a former finance and cabinet secretary.

“The IMF gives a heavy dose where a small one works.” In most cases, he said, the IMF takes a rigid stance and it would have been much better if the government could run the country without the IMF loan,” he said.

The former adviser, however, said he is happy that the loan would keep the government in control of economic management.

Former central bank governor Dr Mohammed Farashuddin, former member of the National Board of Revenue Aminur Rahman, Dhaka University professor MA Taslim and Dr Khandker Golam Moazzem of Centre for Policy Dialogue were the other speakers.

Farashuddin said, though the IMF's conditions seem quite stringent, those need to be abided by for the sake of the economy.

“Why we'll sell electricity at half the rate of India's,” he said, adding that the IMF tells Bangladesh to adjust this type of discriminations.

The former governor said he is too concerned to see a huge capital flight through under and over invoicing of exports and imports.

Taslim said the rising payment for interest is becoming a 'big burden' for the economy. He also said feeding the rental power plants has hurt the private sector investments.

Former NBR member Rahman said the government may fail to achieve the revenue target this fiscal year due to not starting the constructions of the Padma bridge and Dhaka-Chittagong four-lane highway.

Khawza Main Uddin, ERF president, and Abdur Rahim Harmachi, general secretary, were also present.

The Daily Star/ Bangladesh/ 13th May 2012

National Board of Revenue (NBR) plans to take tougher steps to check under-invoicing in imports of luxury items such as auto and refrigerator aimed at raising annual revenue, officials said.

Under invoicing is a means of tax evasion where actual price of an imported product is kept undisclosed and this malpractice occurs in the absence of effective measures.

“We have intensified our vigilance so that none can dodge tax submitting false documents,” ASM Zakir Hossain, Superintendent of Department of Customs Intelligence and Investigation of Chittagong , told BSS.

Hossain said the imported items are now inspected applying two methods - acting on tip off and risk management.
About the large scale import of luxury items including refrigerator ahead of the upcoming budget, he said the customs house is not in a position to deter traders from importing goods in large volume under the import policy (2009-12).

But, he said, ‘we can keep watch whether an importer declares import consignment accurately and gives revenue in right amount for the import.’

The Chittagong port and Customs have jointly undertaken a step to keep the delivery of goods open for 24 hours and even at the weekend so importers do not incur loss, he added.

Sources in the Customs Houses said refrigerator importers pay a fixed amount of duty to the government but for the parts of the items they pay half of the duty payable.

Explaining they said , total tax incidence (TTI) stood at 104.83 per cent for refrigerator import while the TTI is 58.58 per cent for spare parts.

Capitalizing the concession, a section of traders import refrigerator submitting declaration that they are importing spares.

“The NBR has launched a special vigilance to bring down the rate of under invoicing. If any importer is found guilty of the offence, necessary action would be taken against them,” said an official of NBR.

Industry people favoured reduction in the import duty and inclusion of policy of protectionism in the upcoming budget to help grow local refrigerator industry.

Dr Mojibur Rahman, Chairman of Bangladesh Tariff Commission (BTC) said they have found several allegations of importing sub- standard goods submitting false document.

“We are collecting facts on the allegations and necessary steps would be taken as per the law,” he added.

The Daily Sun/ Bangladesh/ 12th May 2012

The National Board of Revenue (NBR) is likely to launch an e-payment system by the end of the month to ease hassles of taxpayers by gradually replacing the manual tax payment system.

Taxpayers including companies, will be able to pay income tax, value added tax and customs duties online after the launch of the electronic payment system, said an official of the NBR yesterday.

But initially, the taxpayers having accounts with banks that share Q cash ATM (automated teller machine) networks will get the scope to pay taxes online.

Two state-run banks, Sonali and Janata, as well as 24 private banks  are in the Q cash network.

Other banks that issue Visa debit or credit cards will also come gradually under the e-payment system, said Kanon Kumar Roy, e-governance focal point officer of the NBR.

"Individual taxpayers and businesses will be able to pay tax online using debit or credit cards or bank accounts for any year. Taxes can be paid anytime from anywhere," he said.

Companies will require to log on to the NBR website and register by using their tax identification number or business identification number, said Roy, also the director general of Directorate of Inspection (taxes) under the NBR.

To finally pay online, the taxpayers will have to use their debit or credit card numbers and personal identification number. After completion of these procedures, the taxpayers will get acknowledgement receipts with bar codes.

Roy said these acknowledgement receipts will be treated as approved, allowing the taxpayers to show these printed copies of these receipts or the bar codes at the time of submission of tax returns.

Prime Minister Sheikh Hasina is expected to inaugurate the e-payment system.

The e-payment system comes in line with the NBR goal of automating the entire revenue collection process to ease hassles of the taxpayers and boost revenue collection by curbing pilferage and anomalies.

Currently, the taxpayers have to pay taxes through treasury chalan (voucher) or pay orders to deposit taxes to the state exchequer through Sonali Bank.

It causes hassles to the taxpayers as they have to stand for long in queues to deposit money and get receipt of payments.

The existing system also has some flaws. Sometimes taxpayers, who complete tax payment related formalities, find that their taxes are not deposited because of misappropriation of fund by middlemen through forgery of documents, insiders said.

In case of pay orders, the taxpayers need to go to the concerned tax office to get receipt of payments. And field-level staffs of tax need to submit these pay orders to treasury for confirmation of tax payment.

But in many cases, the staffs do not submit the pay orders deliberately to get bribe from the taxpayers. It creates uncertainty for the taxpayers, they added.

Roy said e-payment will ease these hassles.

The method will also enable higher authorities to be informed about the latest revenue collection situation, he added.

The Daily Star/Bangladesh/ 9th May 2012