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Speakers at a roundtable yesterday said the government's revenue target for fiscal year (FY) 2004-05 was very high, which with expansion of Vat net would ultimately affect small and medium enterprises (SMEs) and import-substitute industries.

They emphasised proper implementation of the social safety net programmes put forward in the proposed 'ambitious' budget to ensure that the benefits really reach the target groups.

Centre for Policy Dialogue (CPD), a leading independent think-tank of the country, organised the discussion at the CIRDAP auditorium with CPD chief Prof Rehman Sobhan in the chair.

Presenting the CPD's observations on the proposed budget, its Executive Director Debapriya Bhattacharya said Bangladesh is a low-income and under-invested country, where huge sums of money remain unused. He also projected that the amount of unused foreign aid, which is in the pipeline, would be around $7 billion.

According to Debapriya, resource is not a problem in this country; rather, the problem is poor delivery mechanism.

Former commerce minister and frontline BNP leader Amir Khosru Mahmud Chowdhury observed that the government's stress on private sector-led growth was not properly reflected in the proposed budget.

Khosru thinks the import tariff reduction in the budget is aimed at speeding up negotiations with neighbouring states for bilateral and multilateral free trade agreements.

The former commerce minister called for bringing structural changes in the capital market, saying the country's stock exchanges have been striving for modernisation and this drive should get active assistance from the government.

Khoshru also maintained that the government should give more attention to developing basic industries in the country.

Taking part in the discussion, former finance minister M Saiduzzaman labelled the proposed budget as 'bold' and in a sense 'daring', as the targets fixed are not justified by previous performance in the respective areas.

Saiduzzaman stressed proper utilisation of foreign aid and implementation of development projects for improving infrastructure. Noting that the annual development programme (ADP) is heavily dependent on foreign aid, he pointed out that the share of foreign aid in the next ADP too would be around 44.5 percent.

The former finance minister said the government's plan to doubling the credit flow to rural areas has to be sustainable, otherwise people would not be benefited from it.

He also termed the budget's target to generate nine lakh new employment in next year a very interesting one, and said, "We will be monitoring it to see whether it happens or not."

Bangladesh Bank (BB) Governor Fakhruddin Ahmed said, under the budget next year, there would not be any major problem in the macro-economy; but there are some short- and long-term issues. We have to wait for addressing the long-term issues, he said.

Fakhruddin said the bank interest rate in Bangladesh is much higher compared to the neighbouring countries, adding the BB is trying to pursue the commercial banks to charge lower lending interest to facilitate industrial growth.

Business leader Rouf Chowdhury said the proposed budget emits some wrong signals while keeping silent over some important issues. He maintained that the expansion of the value added tax (Vat) net would affect the country's SMEs.

Rouf regretted that the finance minister in his budget speech did not explain the government's position regarding pre-shipment inspection (PSI) system, adding the existing PSI system have been disturbing the businessmen.

As the duty on sugar import has been brought down, the local sugar industry would be seriously affected, Rouf noted, pointing out that around half a million people are directly or indirectly involved in this sector.

Former ERD secretary Moshiur Rahman said the government should reach an agreement with the banks to identify the core area of inflation in the country. He also said it was not logical that there would be no debate on defence allocation.

World Bank Country Director Cristina Wallich emphasised decentralisation of administration and strengthening of local government for getting better benefit out of the budget allocations.

President of International Chamber of Commerce, Bangladesh chapter Mahbubur Rahman termed the budget a very positive and a challenging one. He urged the government to take initiatives so that the garment sector can be competitive in the quota-free market.

Businessman Anisul Islam Mahmud observed that the share of private investment in the gross domestic product (GDP) has not been growing due to lack of infrastructure. For instance, he said, "The existing power system in the country is not suitable for running high-tech industries".

He demanded setting up of more specialised economic zones furnished with all utility services including gas-based electricity generating facilities for attracting foreign and local investment.

Asian Development Bank Resident Representative Toru Shibuichi said the approval process of foreign aided projects in Bangladesh is very slow. He urged the government to use foreign aid efficiently and smoothly and underscored the need for simplification of project approval process.