BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh
BBCi CATEGORIES   TV   RADIO   COMMUNICATE   WHERE I LIVE   INDEX    SEARCH 

BBC NEWS
 You are in:  Business
Front Page 
World 
UK 
UK Politics 
Business 
Market Data 
Economy 
Companies 
E-Commerce 
Your Money 
Business Basics 
Sci/Tech 
Health 
Education 
Entertainment 
Talking Point 
In Depth 
AudioVideo 


Commonwealth Games 2002

BBC Sport

BBC Weather

SERVICES 
Monday, 29 April, 2002, 11:33 GMT 12:33 UK
'Bad time ahead' for Bangladesh
Gas plant
More foreign investment depends on gas exports
Bangladesh faces "a bad time" and must rely on its own resources to develop the economy, the country's finance minister has told business leaders.

At the Bangladesh Aid Meeting in Paris in March, international donors stressed the need for Bangladesh to pursue economic reforms and made few offers of aid, said finance minister Saifur Rahman.

Mr Rahman has unveiled a package of measures to crack on down on corruption and improve tax collection, to plug a fiscal deficit which amounts to 7% of gross domestic product (GDP).

The moves co-incided with the release of a United Nations report which predicts Bangladesh's economic growth will slow this year.

Growth slackens

The south east Asian country's economy is likely to grow by 4.3% in 2002, declining from 5.4% in the last two years, the UN Economic and Social Commission for Asia and the Pacific (ESCAP) said in its regional survey.

woman brick worker
The jobs shortage is growing

The report also cautioned that any increase in foreign direct investment (FDI) will depend "on an agreement to permit gas exports."

"We have a bad time ahead and we must look for more domestic resources instead of foreign assistance" to fund projects in the current fiscal year, said Mr Rahman.

Bangladesh has relied heavily on foreign aid to fund its fiscal deficit. Last year 44% of the shortfall was met by aid money.

Tackling tax evasion

Mr Rahman's solutions include giving the names of tax defaulters to banks "so that tax dodgers cannot obtain bank loans," he told the National Board of Revenue.

The plan has received broad support from business leaders.


We mentally depend...on the donors, which should be changed in the interest of the country

Finance minister

Unpaid taxes were "equal to one third of our gross national product" at $10.3bn a year, said Yusuf Abdullah Huran, president of the Federation of Bangladesh Chambers of Commerce and Industry.

The finance ministry will also increase the sales tax levied on small businesses and cut subsidies on exports. "Cash subsidy has been squandered in many cases," Mr Rahman said.

Corruption

Wastage by the public sector costs Bangladesh $1.38bn a year and the worst offenders are the public sector gas, petroleum and power industries, Mr Huran agreed.

For example, the local press has reported corrupt deals to supply gas illegally to slum dwellers by staff at the Titas Gas Distribution Co.

Embezzlement of revenue from gas supplies running on these illicit pipelines are "one of the most serious problems facing the company," the firm's managing director told the local Independent newspaper.

In addition to improving tax collection and cracking down on corruption, Bangladeshis need to alter their mindset, the finance minister said.

Shift in outlook needed

Although donors fund only 7% of development projects, "we mentally depend more on the donors, which should be changed in the interest of the country."

The flow of foreign aid is certainly slower than hoped: the UN survey found Bangladesh has received $5.6bn of international aid over the last four years compared a target of $7.7bn.

But Bangladesh on Sunday received a warning to get its act together if it wishes to receive foreign investment.

The UN's resident co-ordinator Jorgen Lissner warned that embarrassments like a recent incident when a party of 30 overseas businessmen were stranded for five hours because of a sudden ban on issuing visas at airports can damage the country's credibility.

"Such overnight policy changes are discouraging the foreign investors," he said at the presentation of the ESCAP report.

See also:

09 Apr 02 | Business
India and Bangladesh talk trade
07 Feb 02 | South Asia
Asian meet aims to strengthen trade
31 Oct 01 | South Asia
Bangladesh edges toward gas exports
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories