Dhaka: Finance Adviser Dr Salehuddin Ahmed has highlighted that boosting the tax to GDP ratio and attracting more Foreign Direct Investment (FDI) are significant challenges facing the government, aiming to further streamline the country’s economy. He emphasized the necessity of expanding the tax net as many individuals currently evade taxes, despite initiatives that have recently increased income tax collection.
According to Bangladesh Sangbad Sangstha, Dr. Salehuddin, in a recent interview with the national news agency, acknowledged that while there have been commitments for foreign loans and investments, the response has not been overwhelmingly positive, with the flow of FDI remaining relatively insignificant. He noted that the business community has urged the government to address regulatory barriers, simplify customs policies, and tackle high tax rates and alleged tax disparities.
Dr. Salehuddin pointed out the scarcity of resources and the low tax to GDP ratio, which hampers the expansion of the tax base. He stressed that while direct tax payers are compliant, a significant portion of the population still avoids paying due taxes. In addition to local financing, the government must rely on foreign loans to effectively implement the Annual Development Programme (ADP).
He revealed that substantial foreign loans, particularly from the World Bank and JICA, are in the pipeline, although disbursements have been slow. However, he noted that momentum has recently picked up. The finance adviser underscored that attracting FDI is crucial and hinges on factors such as investment confidence, law and order, and regulatory issues, with agencies like the Bangladesh Investment Development Authority (BIDA) working diligently to improve the investment climate.
Dr. Salehuddin, a former central bank governor, mentioned that the central bank now permits foreign companies to repatriate profits, which has improved the situation. The government is also focused on simplifying tax procedures, expediting customs clearance, and unloading commodities at ports. Efforts are being made to provide investors with input, policy, and regulatory support to boost investment.
He highlighted the development of the Economic Zone at Mirersarai in Chattogram, where government agencies are working to ensure the provision of essential utility services. Dr. Salehuddin noted that while the process will take time, FDI inflows are present, with many foreign companies investing and expanding their operations there.