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Tuesday, October 27, 2020

Govt takes measures to simplify tax system to lure FDI

Al Amin :
Uncomfortable situation is prevailing in trade and investment globally as the world is struggling to face the ongoing pandemic. Everyone, developing and developed countries affected alike by the pandemic.
Under the circumstance, United Nations Conference on Trade and Development (UNCTAD) has recently forecasted Global foreign direct investment (FDI) flows in Bangladesh will decrease by up to 45 percent in 2020. It also projected the FDI will decrease by a further 5 percent to 10 percent in 2021 and will initiate a recovery in 2022.
FDI proposals to Bangladesh came to a halt during April-May this year, which was almost zero. But in June-August period, it resumed albeit slowly," according to the Bangladesh Investment Development Authority (BIDA).
The Country has received a net $582.17 million investment in the first quarter of 2020 which is 44 percent lower than the same period of the last year, according to the Bangladesh Bank's data.
Keeping the situation in mind, the Government has initiated to reshuffle its FDI policies and to simplify corporate taxation system to lure companies, which are now trying to move out from China in view of the Covid-19 pandemic.
A Committee has already been formed under the leadership of Prime Minister's Principal Secretary Dr Ahmed Kaikaus to make the necessary recommendations for a simplified FDI policy and taxation system.
Senior NBR officials -- including Member (Tax Policy) Syed Golam Kibria, Member (VAT Policy) Masud Sadique and Second Secretary (Customs Policy) Mehraj-Ul-Alam Samrat -- are the members of the committee, it is learnt.
The initiative is mainly due to Japanese investors expressing their reservations about the existing FDI norms and corporate taxation system. There are some 310 Japanese companies are in operation in Bangladesh with the growing investment $3 billion.
A study also said that 70 per cent Japanese companies in Bangladesh are keen on expanding their businesses, which is the highest among other countries, despite a number of bottlenecks in the way of smooth investment
 "The government has directed the National Board of Revenue (NBR) to make the FDI more lucrative through some amendments in the policy. A high-level committee has already been formed to formulate a set of recommendations," a senior finance ministry official said.
The finance ministry official said that the government has been giving importance to Japanese investors, as they are mainly looking to exit China and scouting for new countries to set up their businesses.
Experts said along with restructuring FDI policies and simplifying taxation system, Bangladesh should increase regional connectivity, especially with South East Asian (ASEAN) countries to attract FDI.
Engr Akber Al Hakim, President of BPCCI and Director of DCCI, said as the world is reeling under the Covid-19 pandemic, and trade and investment are shrinking across the board, it is more important than ever to foster closer regional co-operation to boost economies.
Dr Mustafizur Rahman,  Distinguished Fellow at Centre for Policy Dialogue (CPD), told The New Nation, "Attracting more FDI, Bangladesh must build connectivity in five key areas - trade, investment, logistics, transport, and people to people."