What are the reform activities and policy supports?
There are many things including 2 per cent of incentive in wage earners' income, cash incentive assistance in all sectors of readymade garments and reduction of defaulted loans and so on. Besides, several laws are being amended as part of banking, financial and revenue sector reforms. New laws are also being formulated. Interest rate below 9 per cent is now a reality. Apart from this, digitisation of saving certificates, formation of separate benches in the High Court for the financial sector, automation in the revenue sector are among many steps which are increasing the quality of the budget.
Bangladesh is in an embarrassing position in the ranking of tax-GDP ratio in the world, even in South Asia. What have you done in the last two years to make progress?
I do not agree with you that Bangladesh is in an embarrassing situation in the tax-GDP ratio. But it is true that Bangladesh is lagging behind in this regard. However, the government never shows any excuse for this. There is a big reason behind this. Many people do not talk about this. No other neighbouring country waives such a huge amount of revenue as Bangladesh does. Huge amounts of duty and VAT are waived on products purchased for all our large and fast track projects. There are also many unpaid duties due to non-transfer of money from one government account to another, which is not taken into account. Besides, large amounts of duties have been waived to save many local industries. If we could collect these unpaid duties, our tax-GDP ratio would have been 14 to 15 per cent. We should also remember that in the 2006-07 fiscal, this ratio was 8.7 per cent. Our annual growth in revenue collection the last ten years before the pandemic was 14.6 per cent where it was only 8.6 per cent in the 2006-07 fiscal. If the revenue sector is in an embarrassing state, where did this achievement come from?
Is there any chance of satisfaction with the current state?
It’s not like that. We have paid special attention to the exploration of the internal resources. We have undertaken various reform activities in the duty and tax sector to make the revenue administration more transparent and speedy. We have been implementing the new VAT (value added tax) law since 2019. After the inauguration of online VAT registration and online VAT return submission system, we have also inaugurated the electronic payment (e-payment) system since July, last year. We are working on the installment of an electronic fiscal device (EFD) to increase revenue collection and reduce tax evasion. Apart from this, the new customs act is going to be amended very soon in the parliament. It will expedite the revenue collection. I hope that apart from these, all the other reform activities we have undertaken would also increase the tax-GDP ratio.
There is not much progress in installing EFDs across the country?
Yes, it’s true that due to the impact of Covid-19 we could not install the EFD machines as per our planning in the first half of 2020. However, we have made significant progress in recent times. As many as 24 sectors have been identified including super shops, sweet shops, confectionaries, fast food shops, residential hotels, decorators and caterers. A project is also underway to install 10 thousand EFD machines.
Many people have allegedly invested in the capital market taking loans at a low interest during coronavirus. Is there any monitoring on it?
The government has announced various stimulus packages to face the possible economic impact in Bangladesh because of the prevalence of Covid-19. Bangladesh Bank has taken many steps to monitor the proper implementation of the loan facility on low interest rate. No news has been received as yet that this money is being invested in the stock market
How do you view the ownership of several banks by a single business group?
Handing over the ownership of banks is not an act of the government. The government has no interference in it. Handing over private companies’ ownership is not under the control of the government. Decision on buyout or acquisition etc. of private companies is entirely their matter.
What are the preparations being taken to face the competition after Bangladesh will graduate from least developed countries (LDC) status?
It’s true that Bangladesh’s export sector will face competition after graduating from least developed countries (LDC) status. Because Bangladeshi products are enjoying duty-free access to the markets of the majority of developed countries and several developing countries under the generalized system of preferences (GSP) and duty and quota-free programmes. Bangladeshi products will not enjoy this facility after graduating from the LDC list. For this reason, we have been trying to keep the duty free access of our products for a certain time, maybe at least five years, after leaving out of the LDC list.
A two-per cent cash incentive has worked like magic on remittance. Why did you take this decision?
Money sent by expatriate Bangladeshi is a driving force of Bangladesh’s economy. Even remittance has continued to rise each month during this global pandemic. We have been giving the two per cent cash incentive since July 2019 at the instruction of prime minister Sheikh Hasina and we have started getting the result now. Expatriates have understood that sending money home through illegal channels is risky. On the other hand, relatives receive some extra bucks for sending money through legal channels.
What is your projection on the global economy? Where have we been heading now and in which direction?
According to the World Economic Outlook 2020 of the International Monetary Fund (IMF), the global growth was at 2.8 per cent in 2019. Global GDP growth was revised to 4.4 per cent from 5.9 per cent in 2020 because of the coronavirus pandemic. According to the IMF, the global economic growth has been estimated at 5.2 per cent for 2021. And I almost agree with them because vaccination has begun in China, India and the big economies of the developed world. The use of several Covid-19 vaccines has started. As a result, it will be possible to bring back the normal economic activities by controlling the coronavirus pandemic. I am hopeful that the wheel of the economy will start rolling in Europe and the USA soon. Like China, India also started economic activities at a full pace.
Besides, according to BBS, Bangladesh achieved 5.24 per cent of GDP growth in 2019-20 fiscal amid the brief economic standstill due to coronavirus. We have started a vaccination campaign for Covid-19 because of the foresight of prime minister Sheikh Hasina.
In addition, food production, remittance, export and foreign direct investment have been witnessing positive trends. The rise in the number of movements of import and export containers through Chattogram port is also hopeful. These scenarios reflect economic recovery has started
What challenges do you see in the next fiscal year?
We have brought almost all of our internal economic areas to the mainstream economy. Implementation of 23 stimulus packages announced by the prime minister has contributed the biggest. Our monitoring and attention will continue in implementing the stimulus packages in the next fiscal year. Steps have been taken in all sectors of the economy affected by the pandemic. The condition of our economy has returned to previous growth gradually. For this reason, I think our main challenges may come from external sources in the coming days. Several specific issues including global economic recovery may become a challenge for us. If the global economic slump continues, it will also be damaging for us. If the economic slump caused by the pandemic continues in the major export markets, our export trade will be disrupted. And the volatile oil price in the international market will be a big challenge. Disruption or halt in sending workers in the major labour market is another big challenge. Taking these things into consideration, I have outlined the economic plan and budget of the country.
What is your message on the next budget?
The budget has been formulated keeping people from all walks of life in mind. It will be a lifesaving budget. It’s also a budget for the protection of people’s livelihood. It will be a budget for all from the marginal group to the businesses and industrialists. I have formulated the budget for the 2012-22 fiscal following such a strategy so that everyone has a participation in it. Wait, you will see. This budget will strengthen the advancement of Bangladesh during its future journey.
*This interview appeared in the print and online editions of Prothom Alo and has been rewritten in English by Ashish Basu and Hasanul Banna