Bangladesh Budget: Renewed focus on growth in industry-friendly Budget

Bangladesh’s Finance Minister A.H.M. Mustafa Kamal presented the country’s Budget today for FY’22. The government has taken up a strategy in the Budget to speed up recovery in various sectors of the Bangladeshi economy, which has been ravaged by the Covid-19 pandemic.

The Asian Development Bank has forecast that Bangladesh’s economy would grow by 5.5-6% in 2020-2021 and 7.2% in 2021-2022.

Budget highlights:
Timely implementation of key projects– One important goal the government is striving to fulfill is timely implementation of all projects of national importance including mega projects in the infrastructure sector such as the Padma Bridge, Padma Rail Link Bridge, Rampal Power Plant, etc. to sustain higher growth.

Another goal is to upgrade 8,500 km of metalled roads and 3,800 meter bridges/culverts to make rural road infrastructure sustainable.

Exemption of Advance tax- To sustain the existing growth momentum of local industries and to lessen dependence on foreign goods, the government has exempted taxpayers from paying the Advance Tax (AT) on certain raw materials of iron and scrap vessels that are used for manufacturing.

“No major changes in duty structure have been made in the recent budget except the advance tax that has been exempted. It may benefit in terms of cash flow. The earlier huge advance tax used to get stuck at govt exchequer during scrap imports that were to be adjusted after selling finished goods”, highlighted a market participant from Bangladesh based mill.

Development of ports-The capital and maintenance dredging program of Rabnabad 87 channel of Payra port has been undertaken with funding from Bangladesh Infrastructure Development Fund (BIDF). It would increase the draft up to 10.5 meters through capital dredging of the Rabnabad channel. With an increase in navigability of the channel, ships with a carrying capacity of 40,000 dead-weight tonnes (DWT) will be able to enter the port. This will bring a large number of foreign ships to the port and add a new dimension to the country’s foreign trade.