Experts, economists and public representatives on Sunday demanded that the government reform the banking sector to establish in the country a disciplined financial system capable of providing access to credit and security to investors.
They regretted lack of effective discussions about the proposed budget at parliament.
Debates and discussions about budget create an opportunity to improve policy measures and address problems, they said at a budget dialogue organised by the Centre for Policy Dialogue at the Lakeshore Hotel in Dhaka.
CPD chairman Rehman Sobhan presided over the dialogue.
Rehman said that intensive and constructive discussions were important to improve policy and address problems in effective way but the budget sessions of the parliament had been being boycotted by the opposition parties over the years.
Any budget dialogue organised by others like the CPD can never be a substitute for intensive and constructive discussion on any important public issue at parliament where public representatives participate, he said.
The CPD chairman said that the economy needed a strong financial sector which could provide both the stability in access to credit and security to investors for moving into a transformative phase with major structural changes.
‘One of the most dangerous elements of financial system is the use of short-term deposits for long-term investments,’ he said.
Traditionally, capital market and specialised financial institutions provide long-term investment.
Now, the commercial banks, whose business is based on deposits of short-term investors, are now bearing the full risks of undertaking of financing long-term investments as the country’s stock market remains non-functional as source of capital for new investments, he said.
Metropolitan Chamber of Commerce and Industry president Nihad Kabir regretted that the government failed to bring more new companies to the capital market for financing long-term investment.
Currently, only 350 companies are listed with the capital market, rising from 200 in 1993, she said, adding that of the listed firms, only 15 companies could be recommended for investment.
‘It is a complete regulatory failure,’ she said.
Former commerce minister Amir Khosru Mahmud Chowdhury, also a Bangladesh Nationalist Party leader, said that the National Board of Revenue should find out those five per cent of people who accumulated excessive wealth in recent years through embezzling bank money and participating development programmes like mega projects.
‘We all know who they are as it is known who have made investments abroad,’ he said.
He criticised the government for proposed corporate tax cut for banks saying that it was an incentive for looting banks and embezzling public money.
Referring to a comment made by CPD distinguished fellow Rownak Jahan, Khosru said that there was no need to frame a populist budget for attracting voters as the incumbents felt no necessity for voting.
‘Voters are now out of the election process and a small section of people including those five per cent remains in the election process and the government has framed the budget for them,’ he said.
Planning minister AHM Mustafa Kamal said irregularities in the banking sector were a legacy from the previous governments.
‘We will have to bring in massive reforms in the sector and the central bank [Bangladesh Bank] will be strengthened with providing effective independence,’ he said.
About the election comments, Kamal said that the elections were held in 2014 but they [BNP] did not participate and raised allegations that the MPs were elected unopposed.
He said that the government proposed reducing banks’ interest rate to attract foreign direct investment as the rate in the country was high.
State minister for finance and planning MA Mannan advised the participants of the dialogue to wait to see what steps the government would take about the corporate tax cut.
‘The government is carefully noting the opinions of you and others over the proposed corporate tax reduction for banks,’ he said.
Rownak Jahan said that the budget in an election year was supposed to be a populist one but it was seen that the proposed budget increased tax burden on the lower income group of people while income disparity had also been rising in recent years.
‘So, it will be a matter of observing how the ruling party attracts voters,’ she said.
Gonoshasthaya Kendra founder Zafrullah Chowdhury said that an intensive discussion about the proposed budget should be held in parliament.
Members of the parliament are passing time eulogising the ruling party and party chief at the budget session, he said, adding that it was expected from a parliament where 154 members were elected unopposed and more than 60 per cent of the MPs came from the business community.
He also said that killing people without trial and constructing mosques could not eliminate drug problem from the country.
Zafrullah suggested flourishing cultural and sport activities and increasing duty on drugs for addressing the problem.
CPD distinguished fellow Mustafizur Rahman moderated the session, while CPD executive director Fahmida Khatun presented the keynote paper.
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