Finance Minister of Bangladesh, Mustafa Kamal is scheduled
to announce the budget for financial year 2019-20 in parliament on 13th
June 2019, a few days after the announcement of Pakistan's Budget for the next
financial. I have just picked up news from a leading Bangladesh newspaper, which
may give Pakistanis a chance to see what is being done there.
Aiming to invigorate the promising export sector, an ailing
stock market and cooling property markets, the upcoming budget is likely to
announce a number of incentives to rekindle the business and investment
environment, said sources involved in preparing this year’s national budget for
parliamentary approval.
The incentives include enhanced subsidies, tax cuts and
fiscal stimulus to take the economy to an 8.5% growth rate in financial year
2019-20.
Realtors and land developers have long been demanding a
reduction of registration fees, including the Value Added Tax (VAT) and other
taxes on the sale and transfer of property, like apartments or land, so as to
stimulate the slowing real estate market. According to sources, the upcoming
budget is likely to almost halve the current aforementioned costs.
Currently, total fees for flat registration are 14% to 16%,
and 17% for land registration. The fee is imposed on the deed value of
property.
A budgetary measure is also likely to be announced for the
first time for the resale of existing (not new) flats.
National Board of Revenue (NBR) officials think a secondary
property market boom would stimulate the economy further if registration fees
for used flats were rationalized.
Presently, registration costs remain the same for both new
and used flats.
The proposed budget is set to raise the tax-free income
ceiling for cash dividend income from stocks to Tk50,000, up from the current
ceiling of Tk25,000.
“The Finance Minister is serious about reviving the morale
of stock investors in the upcoming budget. A number of budget incentives are in
the offing to streamline capital markets,” said a top NBR official. “The market
(capital market) will act positively after the announcement in the proposed
budget,” he hoped.
Officials concerned at the finance division under the
Ministry of Finance said the subsidy outlay in the budget would be around
Tk45,000 crore for the next fiscal year, up from Tk38,500 crore earmarked for
the current fiscal year.
The highest subsidy amount of Tk9,000 crore is likely to be
allocated for the agricultural sector, with some allocation expected to be
earmarked for farm mechanization.
The budget is also likely to announce a one percent export
subsidy for the apparel sector, in addition to the 4% now applicable for
receipts coming from non-traditional markets. The amount to be earmarked is
likely to be Tk9,000 crore, which is now around Tk3,500 crore. Presently, 26
export-bound items, including apparel goods, get export subsidies of anywhere
between 2% and 20%.
In the current budget, export sector subsidies amount to
Tk5,000 crore. Of the total, Tk500 crore is allocated for jute and jute goods.
The power sector subsidy is likely to be earmarked at
Tk10,000 crore, and the energy (including LNG) sector is likely to get Tk9,000
crore.
The proposed budget is reportedly set to announce an
incentive for foreign exchange remitters, as the government is desperate for
more remittances to handle the foreign exchange demand to manage rising import
payments.
A subsidy of 2-3% is likely to be offered in the budget for
remitters. Under the planned scheme, recipients of remittance will get 2-3%
extra local currency on the remitted amount. For this purpose, an amount of
Tk3,000 crore will be allocated in the budget.
