Recently, Petrobangla has proposed BERC to double the price of per unit gas for industrial and captive consumers from Tk 30 and Tk 31.50 to Tk 75.72, respectively to reduce the burden of government subsidy on the price of gas production. Moreover, the National Board of Revenue (NBR) has already decided to increase the income tax on motorcycle, refrigerator, air-conditioner and compressor industries from 10 percent to 20 percent.
The Dhaka Chamber of Commerce & Industry (DCCI) has expressed its deep concern over the negative impact of such a decision on the country’s overall business activities as well as on local and foreign investment. If the price hike proposal is accepted, the cost of production in industries will subsequently increase and will create an inflationary pressure. It is also necessary to maintain a stable and investment-friendly environment by ensuring long-term tax benefits as well as commitment to policy continuity in expanding trade and investment for a sustainable economic growth.
The proposal to increase the price of gas by more than double without ensuring uninterrupted gas supply is undoubtedly a challenge for the industry and the cost of doing business will increase manifold if this plan is implemented. DCCI feels that in the current economic scenario, such price hike of gas will impact the overall investment climate, reduce the possibility of setting up new industries and hinder the business operations of existing investors. As a result, the production cost of export-oriented industries will increase significantly, which will weaken Bangladesh’s export competitiveness in the international market and it will discourage local and foreign investment in the country as well.
In the prevailing unstable economic situation, the proposal of gas price hike and increase of VAT and tax rate on various products will create a challenging situation for the overall economy, reducing the competitiveness in the global market. Therefore, DCCI believes that it is necessary to take joint initiatives by the government, private sector and concerned stakeholders to overcome the existing economic challenges by ensuring a cost effective business-friendly environment in the country.
Also, tax rate hike on manufacturing motorcycles, refrigerators, air conditioners and compressors amid the present economic situation is very unfriendly for industries though there has been a promise of tax benefit in the mentioned sectors until 2032. If this promise is retracted in the midway, that may bring in a detrimental message to both local and foreign investors as an “inconsistent policy” by the Government. This move will seriously impact foreign investment and also put local investors in a doldrums.
Meanwhile, the Dhaka Chamber of Commerce & Industry (DCCI) is urging the BERC and Petrobangla to reconsider the proposal of gas price hike considering the overall reviving progress of the country’s economy amid the unstable geo-economic situation. At the same time, DCCI is requesting the government to reconsider the move of increasing the VAT and tax rate in order to reducing the pressure on business operating costs and overall inflation.
