Main Page «
Metro «
Business «
International «
Sports «
National «
Editorial «
Op-Ed «
Home «
Timeout «
Letters «

Archive «
Launch Supplement «
Special Supplements «

The finance and planning minister, M Saifur Rahman, on Thursday unveiled an ambitious Tk 64,383-crore budget for the next fiscal year, proposing more allocation for social safety, employment generation, education, farm subsidy and health.
   In what appears to be a move to appease the business community ahead of the next general elections, due in early 2007, Saifur backtracked on an emphatic pre-budget stand for discontinuation of tax holiday and a scheme to legalise black money.
   With both revenue and development spending projected to go up by 15.7 per cent, Saifur craftily focused more on direct tax areas than indirect sources, which could have wider implications on the public.
   Increase in individual tax and corporate tax for non-listed companies, hiking taxes on apartment and brickfield, and bringing some export sectors into the tax net are among the steps he proposed in order to earn more to fund public spending.
   With an outlay of Tk 64,383 crore — combining development and non-development spending — he set the gross domestic product growth target at 6 per cent in clear conformity with the lender-driven new national poverty reduction strategy.
   His economic growth projection, however, comes on the heels of weaker-than-projected growth in the outgoing fiscal year.
   ‘Given favourable external and domestic environment, I believe economic growth may exceed 6 per cent in the next fiscal,’ he said, putting the provisional growth estimate for the flood-hit 2004-05 fiscal year at around 5.4 per cent, down from the original projection of 5.52 and far below the required 7 per cent growth to achieve poverty reduction targets.
   The growth in 2003-04 was 5.3 per cent, which was suddenly revised upward to 6.3 per cent on fresh calculations this May.
   ‘I trust that had there been no odds, we could have achieved a growth of over 6 per cent this year,’ he told parliament, with the prime minister, Khaleda Zia, by his side. Adverse flood effect might result in a negative growth of 3.3 per cent in crop and vegetable sub-sector this year reversing the past year’s 4.27 per cent positive growth, he said, citing the factors that limited economic growth.
   Human resource development has topped next fiscal year’s economic agenda as Saifur proposed an allocation of Tk 9,686 crore, or 15 per cent of the total outlay, for the education sector. ‘Clearly, this sector will be receiving the highest allocation,’ Saifur said, detailing that Tk 3,360 crore would be spent on 78 projects.
   In Saifur’s budget proposal, rural development and infrastructures received a significantly increased allocation at Tk 6,383 crore and the health sector was given an enhanced amount of Tk 4,240 crore.
   Apart from giving additional farm subsidy and other supports, the finance minister announced fresh allowance for the disabled, and special funds for job creation and rehabilitation of workers.
   Most of the priorities of the next fiscal year have been tailored in line with the lender-driven but home-grown National Strategy for Accelerated Poverty Reduction, said to be the government’s handbook for poverty reduction strategy for the next three years.
   Conspicuously, the share of combined revenue and development spending focused directly and indirectly to poverty reduction will come down to 54 per cent of the total outlay next year from the current fiscal year’s 62 per cent of the development budget and 42 percent of the non-development budget.
   As usual, the new budget, which has envisaged a bloated annual development programme of Tk 24,500 crore, will have a deficit, this time projected at 4.5 per cent of the GDP, which is again within the limit set by the multilateral lending agencies despite the budget’s expansionary outlook.
   Revenue receipt has been estimated at Tk 45,722 crore, up by 16.6 per cent of the downwardly revised target of the outgoing fiscal year. The overall deficit, projected at Tk 15,356 crore, will be bankrolled by an expected domestic borrowing of Tk 8,341 crore and external debts of Tk 7,015 crore.
   Saifur, however, lowered his projection of the local resources component of development spending to 52 per cent next year from 55.5 per cent in 2004-05.
   Before presenting the new budget, Saifur placed the revised budget for the 2004-05 fiscal year, slashing both the ADP and the revenue receipt projection in the wake of dismal performances.
   The revenue income shortfall was adjusted by trimming development outlay. But an increase in revenue expenditure pushed up the deficit to 4.5 per cent of GDP, against the projected 4.2 per cent.
   Saifur referred to the additional pressure on external trade balance due to price volatility of oil and some other importables in the international market, contributing hugely to a 26 per cent increased import bill in July-March 2004-05 compared to a year ago.
   Sharp rise in oil price alone would cost the public coffer an additional import bill of $600 million or Tk 3600 crore this year, he said.
   ‘As a result, like many countries including our neighbouring ones, Bangladesh experienced some upward inflationary pressures,’ Saifur told the parliament.
   Point-to-point inflation crept up to 6.2 per cent in March 2005 against 5.9 per cent in March 2004 on the back of spiralling food prices and impact of global fuel and commodity price volatility.
   In his budget speech Saifur suggested no short-cuts to contain inflation, but hoped that the expected growth trend in agriculture and some other sectors would bring down inflation to ‘a tolerable and manageable limit’.
   While focussing on the government’s priorities in education, the minister was upbeat with the growth of female enrolment and completion in secondary education, and claimed success of the government’s policies to promote female education.
   He attributed the rise in primary enrolment to policies like the Tk 520-crore stipend scheme that currently covers 55 lakh primary students. For further improvement of the quality of primary education and ensuring cent per cent coverage, the government has taken up a Tk 5,000-crore primary education development project phase-II, he mentioned.
   ‘Consistent with our poverty reduction strategy, we are implementing a programme titled Health, Nutrition and Population Sector Programme with an outlay of Tk 9,500 crore,’ the finance minister said, detailing the long-term plan to ensure better and wider health care services across the country.
   He proposed an allocation of Tk 2,213 crore for agriculture with special focus on extension, research, production, preservation and distribution of HYV seeds, storage and marketing as well as irrigation.
   To lower farm production costs, Saifur proposed that 25 per cent fertiliser subsidy for urea as well as other imported fertilisers like DAP, MOP and TSP will continue for the next fiscal year.
   He announced two-fold increase of farm subsidy to Tk 1,200 crore from the current fiscal’s original allocation of Tk 600 crore. Budgetary perks like 30 per cent cash subsidy for farm exports and 20 per cent rebate on electricity tariff for irrigation and agro-based sectors would also continue till June 30, 2006, he announced.

The finance and planning minister, M Saifur Rahman, on Thursday proposed a Tk 64,383-crore budget for the 2005-06 fiscal year.
   The budget outlay for the next fiscal year is 12.5 per cent higher than the Tk 57,248-crore original budget and 15.7 per cent higher than the Tk-55,632 crore revised budget for the current fiscal year.
   Revenue earnings will contribute Tk 45,722 crore or about 71.1 per cent of the total outlay, up 10.7 per cent from the original and 16.6 per cent from the revised budget for the outgoing fiscal year.
   Of the remaining Tk 18,661 crore, known as overall budget deficit, Tk 3,305 crore will come from foreign grants, up 75 per cent from the original and 25 per cent from the revised budget for the current fiscal year.
   Saifur expects a hefty amount of assistance from multilateral lending agencies in loans and grants following implementation of different reform programmes by the government and thus contain overall budget deficit within 4.5 per cent of the gross domestic product, inside the ceiling of 4.6 per cent fixed in the lender-driven poverty reduction strategy paper.
   Domestic and foreign borrowings, known as deficit financing, will contribute Tk 15,948 crore.
   Foreign borrowing is proposed to be Tk 7,015 crore, 0.8 per cent more than the original and about 13.7 per cent more than the revised budget for the current fiscal year.
   Domestic borrowing, combining bank and non-bank sources, will bankroll Tk 8,341 crore, an increase of 17.5 per cent and 9.7 per cent respectively over the original and revised budget for the current fiscal year.
   Of the non-bank borrowing worth Tk 4,701 crore, the government will have to collect Tk 3,726 crore by selling savings instruments. Saifur has proposed to borrow Tk 3,640 crore from the banking system, of which Tk 3,446 crore will be received as short-term debt.
   He has also proposed Tk 26,554-crore development expenditure, up 17 per cent from the revised and 11.4 per cent more than the original outlay for the current fiscal year.
   As usual, the annual development programme worth Tk 24,500 crore is the major element of the development outlay.
   Non-development expenditure outlay has been increased to Tk 38,082 crore, 13.1 per cent higher than the revised and 14.7 per cent higher than the original outlay for the outgoing fiscal.
   Saifur has proposed revenue expenditure programme worth Tk 35,523 crore, up 12.45 per cent from the revised and 16.4 per cent from the original budget for the 2004-05 fiscal year.

The finance and planning minister, M Saifur Rahman, said that the GDP growth rate may exceed 6 per cent in the 2005-06 fiscal year, given a favourable internal and external environment.
   ‘I believe economic growth may exceed 6 per cent in the next fiscal year,’ said Saifur while unveiling the fiscal measures for the next financial year on Thursday. The growth rate has been projected at 6 per cent and 6.5 per cent in the medium-term macro-economic framework in the fiscal years 2005-06 and 2006-07 respectively.
   The National Economic Survey 2005 says that in order to achieve the above growth rates, investment has to be increased to 26.5 per cent and 27.5 per cent of the GDP in the next two fiscal years.
   The growth rate of the gross domestic product for the current fiscal year (2004-05) has been projected at 5.38 per cent. The investment-GDP ratio was 24.43 per cent this fiscal year.
   According to the survey, the per capita GDP (at current market prices) is expected to rise to $445 (Tk 26,898).
   The growth rate in the last fiscal year has been revised to 6.27 per cent instead of 5.52 per cent.
   According to the provisional estimate, GDP at constant market prices (base: 1995-96) has been set at Tk 2,65,512.3 crore in the current fiscal year while the GDP at current market prices is projected at Tk 3,68,476 crore.
   In the current fiscal year, the growth rate of agriculture and forestry is expected to decline by 0.73 per cent but the fisheries sector is expected to grow by 4.02 per cent.
   In the industrial sector, mining and quarrying is expected to grow by 8.4 per cent, manufacturing sector by 8.43 per cent, the power, gas and water sector by 9.08 per cent and construction by 8.69 per cent.
   The service sector is expected to grow at the rate of 6.63 per cent, financial sector at 8.95 per cent, transportation and communication at 8.09 per cent and real estate at 3.64 per cent.

The government has once again doubled farm subsidy to Tk 1,200 crore, making an overall allocation at Tk 2,213 crore for the agriculture sector under the proposed revenue and development budget for the 2005-06 fiscal year.
   ‘In the next fiscal year, the programme for agriculture extension, research, field training, production, preservation and distribution of HYV [high yielding varieties] seeds, storage and marketing of agriculture produces, and irrigation will be further strengthened,’ said the finance and planning minister, M Saifur Rahman, in his budget speech on Thursday.
   He also announced continuity of a set of specific steps that were taken at the beginning of the current fiscal year as well as some fresh steps in order to help reduce the cost of agricultural production.
   The 25 per cent subsidy to offset the trade gap for urea, di-ammonium phosphate, murate of potash, tri-sulphur phosphate fertilisers will continue in the next fiscal year, Saifur told the parliament.
   Also, he said, interest on agricultural loan provided for production of pulses, mustard seeds, spices and maize will be reduced to two per cent from eight per cent from July 1, 2005.
   Saifur announced extension of the repayment period for principal amount of classified agricultural loan up to Tk 5,000 till March 30, 2006 from the deadline of March 30, 2005. The government earlier waived interest on such loan as on December 31, 2003.
   He said the minimum charge for all electricity connections throughout the country for irrigation would be waived with effect from July 1, 2005.
   At the same time, he announced policy continuity for 20 per cent subsidy on electricity bills of Palli Bidyut Samiti for electricity used in irrigation, 30 per cent cash subsidy for export of agricultural commodities, vegetables and fruits, and 20 per cent subsidy on electricity used in agro-based industries.
   Besides, Saifur said the state-owned specialised banks had disbursed Tk 4,200 crore agri-credit till April, which is 47 per cent higher than the disbursement in the corresponding period of the previous fiscal year.
   In the next fiscal year, the Bangladesh Bank will provide refinancing as required to relevant banks at five per cent interest rate to enhance agricultural credit flow.
   Saifur cautioned that steps would be taken to strengthen monitoring for ensuring proper disbursement of loans among the farmers.

Tax measures proposed in the 2005-2006 fiscal year will be an extra burden for individuals due to imposition of direct and indirect taxes, but the proposed measures will have mixed impact on the corporate sector.
   The Finance Bill 2005 has proposed that submission of wealth statements should be made mandatory for all taxpayers.
   The minimum tax for individuals will be raised to Tk 1,800 from Tk 1,500.
   The highest individual tax, which was 25 per cent of incomes above Tk 9 lakh per year, has been reduced to 20 per cent. Those with incomes above Tk 10,20,000 will have to pay 25 per cent income tax. This will give some relief to rich taxpayers.
   The tax-free income limit has been increased to Tk 1,20,000 from Tk 1 lakh. All these tax measures relating to individuals will come into effect from 2006-2007, according to the budget speech of the finance and planning minister, M Saifur Rahman. In short, they will be imposed after the general elections.
   Small savers will have to bear the brunt of a tax measure that proposes a 10 per cent tax at source on interest of fixed deposits in non-banking financial institutions.
   The budget has proposed Tk 7,500 as income tax at source for a brickfield having only one section production capacity, Tk 10,000 for one and half section and Tk 15,000 for two sections or more production capacity.
   Currently, brickfields have to pay Tk 5,000 per year as ‘at source tax’, irrespective of the amount of their production.
   The middle and upper classes will be affected as bricks will now be costlier due to the substantial enhancement of tax.
   Besides, tax on per square feet of flat has been proposed between Tk 200 and Tk 300, in place of current rate of between Tk 150 and Tk 250, which will put extra burden on flat owners and buyers.
   The bidi smokers, who are mostly poor labourers and workers, will indirectly be affected as the budget proposes four per cent tax at source on bidi, instead of the current three per cent.
   According to the Finance Bill, taxpayers, irrespective of their incomes, have to submit wealth statements with their tax return, which is now applicable for those having income above Tk 3 lakh per year.
   Commercial banks burdened with defaulted loans will get one per cent rebate on their bad loans. The existing two per cent rebate was supposed to expire in the current fiscal year.
   The government is likely to earn revenue of about Tk 250 crore per year due to the decrease in rebate.
   Exporters of readymade garments have to pay 0.25 per cent tax at source on their export earnings, while 0.15 per cent tax at source has been proposed on the transaction value of shares for members of the stock exchanges.
   The budget has proposed 10 per cent reduced rate of tax for the computer software
   business.
   Income tax of unlisted companies has been increased to 40 per cent from the current 37.5 per cent. This will be applicable for the 2006-2007 fiscal year, ie after the general elections.

Tax holiday for 18 specific industrial sectors has been extended to June 30, 2008 with the condition that they will invest 10 per cent of their profit in the share market every year, according to the Finance Bill 2005.
   The sectors are textile, high-value readymade garment (overcoat, jacket and suits only), pharmaceutical, melamine, plastic product, ceramic and sanitary ware, steel from iron ore, fertiliser, insecticide and pesticide, computer hardware, residential hotel with facility of three star or more, petrochemical, basic raw material for drugs, chemicals and pharmaceuticals, agricultural machine, ship building, boiler and compressors, textile machinery and physical infrastructure.
   The tax holiday period depending on location has been proposed to be four and six years in place of five and seven, according to the budget speech of the finance and planning minister, M Saifur Rahman.
   The current regulations require an industrial entity that enjoys tax holiday to re-invest 40 per cent of its yearly profit in the industry against which the facility has been given or in any new industry.
   However, the Finance Bill 2005 categorically proposes investment of 10 per cent of yearly profit in the share market.
   ‘…another 10 per cent of the income exempted under sub-section (1) is invested in each year before the expiry of three months from the end of the income year in the purchase of shares of a company listed with any stock exchange,’ the bill reads.

The finance and planning minister, M Saifur Rahman, changed his position on whitening black money and reducing the number of items that enjoy zero-tariff at the last moment at the insistence of pressure groups and taking into account the possible repercussion of the measures on the next general elections, sources in the National Board of Revenue told New Age.
   Saifur, who had repeatedly hinted at termination of the facilities in public and was also learned to have asked NBR officials to include the announcement of their discontinuation in budget speech, proposed continuation of the scheme to legalise black money up to June 30, 2006 through payment of 7.5 per cent income tax.
   The decision to continue the facility came on Tuesday although the budget speech, which included the announcement of its termination, was vetted by the law ministry on Monday, the sources said.
   Meanwhile, the NBR chairman, Khairuzzaman Chowdhury, who had gone public in early May with the announcement that zero-tariff would be completely withdrawn from the next fiscal year, asked tax officials in late May to identify 300 of 519 zero-tariff items for which the facility would continue.
   On May 3, Saifur asked the officials not to go for any harsh measure that might affect the industrial sector and also to include the readymade garment sector in the list of recipients of tax holiday, the sources said.

The finance and planning minister, M Saifur Rahman, on Thursday stressed good governance and speedy reforms for achieving economic growth and poverty reduction.
   ‘Good governance in all spheres is an essential for the efficient utilisation of resources and therefore the pace of reforms should be further geared up,’ said Saifur in his budget speech.
   Stressing a number steps toward reforms, he said the government, considering socio-economic reality, had designed reform programme to ensure appropriate and transparent utilisation of resources.
   ‘We have introduced new procedures for the formulation of development projects by way of reforming the existing process to bring about speed and efficiency which will allow the gearing of project objectives towards the goal of economic growth and poverty reduction,’ he said.
   He said guidelines had been prepared on how to make pro-poor and gender-focused budget and the implementation of the guidelines is under way. ‘Preparation of relevant guidelines is in its final stage to further improve public expenditure management and establish internal control and internal audit in all ministries.’
   Saifur said the process of transformation of the Public Procurement Guidelines into a law was in its final stage; it will ensure further transparency and accountability in public procurement.
   He said relevant law was being framed to create an oversight regulatory body to improve the quality of accounting and auditing in private sector.
   To improve law and order, he said the organisational structure of the police forces and the Rapid Action Battalion has been strengthened while required reforms are being implemented with support of development partners to enhance efficiency and to bring about transparency in their activities.
   ‘We have been continued our efforts to frame new laws and amend existing ones to ensure speedy trial, women’s empowerment, protection of children’s rights, provision of legal aid to the poor and socio-economic development.’
   To make Anti-Corruption Commission effectively operational, he said the preparation of organisational structure of the commission is under way. ‘We hope the commission will play an effective role in curbing corruption.’
   Saifur said the pay and allowances of government employees and autonomous bodies, and also the salary support to the teachers and employees of the MPO-listed non-government schools and colleges from January 2005 increased.
   ‘This will inspire all officers, employees and teachers of all classes engaged in administration and educational institutions to devote themselves to public service with increased efficiency and honesty,’ he believed.

The government has allocated, only to the non-development head of the proposed budget, an amount of Tk 4,600 crore to fund programmes covering poverty reduction, social safety net and employment generation, said the finance and planning minister, M Saifur Rahman.
   Saifur also made a further allocation of Tk 200 crore from the revenue budget to the micro-credit fund already created under the rural development and cooperatives division, and the ministries of fisheries and livestock, youth and sports, liberation war affairs and women and children affairs. The finance minister announced new programmes like allowances for fully retarded people, special funds for seasonal unemployment reduction, job creation and rehabilitation of workers, especially those in the readymade garments sector.
   He also maintained policy continuity for welfare programmes undertaken either by the BNP or the previous Awami League regimes that could directly benefit hundreds of thousands of people who are believed to be floating voters.
   ‘It is our fundamental responsibility to create opportunities for minimum subsistence for the disadvantaged and destitute segment of the population,’ Saifur told the parliament, spelling out a set of targeted programmes in line with the ruling party’s election manifesto.
   From July 1, 2005, the finance minister proposed increase in monthly allowances of the beneficiaries of the old-age allowance programme to Tk 180 from Tk 165 and also proposed to raise the coverage to 15 lakh people from 13 lakh at present.
   Under the allowance programme for the widowed, deserted and destitute women, the monthly allowance has been raised to Tk 180 from Tk 165 and the number of beneficiaries to 6.25 lakh from 6 lakh women.
   Saifur also proposed enhancement of the number of beneficiaries under honorarium programme for insolvent freedom fighters to 70,000 from 60,000.
   The finance minister allocated an additional amount of Tk 75 crore to the fund for mitigating risks due to natural disasters, Tk 20 crore to the fund for rehabilitation of the acid-burnt and the physically handicapped and Tk 75 crore for the fund for housing the homeless.
   Saifur increased the allocation of food to 10.32 lakh tonnes for VGD, food for work programme, test relief and gratuitous relief, besides raising the allocation to Tk 300 crore for food for work programme.
   He also kept an allocation of Tk 100 crore to the Ministry of Food and Disaster Management to meet the emergencies due to natural disaster.
   The minister announced introduction of a programme, styled allowance for the fully retarded, with an allocation of Tk 25 crore for paying monthly allowances of Tk 200 per head.
   Saifur proposed creation of a Tk 50-crore fund for reducing seasonal unemployment due to geographical constraints.
   He made allocations of Tk 30 crore and Tk 20 crore to the special funds introduced in the current fiscal year for retraining and employment of the voluntarily retired/ retrenched employees/ labourers and retraining and employment of workers/employees of readymade garment industries respectively.
   Saifur also proposed an allocation of Tk 281 crore to the Palli Karma Shahayak Foundation, the government’s apex micro-financing window, to implement the micro-credit programme through NGOs in the next fiscal year.
   He announced an increase in allocation to the Bangladesh NGO Foundation to Tk 100 crore to accelerate the pace of development of the rural sector, and additional allocation of Tk 100 crore to the Special Fund for Employment Generation of the Hard-Core Poor.
   The finance minister also made an additional allocation of Tk 100 crore for disbursement of loans through state-owned specialised banks and another allocation of Tk 150 crore to the Bangladesh Bank’s Equity Entrepreneurship Fund.

The education and information technology sector together are set to receive the highest allocation — Tk 9,686 crore — both for development and non-development spending in the proposed budget for the 2005-06 fiscal year, the finance and planning minister, M Saifur Rahman, told the parliament on Thursday.
   The allocation is 15 per cent of the total outlay and Tk 1,827 crore higher than the actual allocation for the current fiscal year.
   Saifur has also proposed an allocation of Tk 3,360 crore in the development budget for implementing 78 projects in the education sector.
   An allocation of Tk 9,487 core is likely for the education sector including primary and mass education. The finance minister proposed Tk 199 crore for information technology of which Tk 88 crore is to be allocated for development budget.
   ‘The government is giving due importance to ensure achievement of the strategic goals, programmes and priorities, identified in the Poverty Reduction Strategy Paper,’ he said.
   He said the government has taken up the projects, recognising the need for expansion of, and qualitative improvement in, primary education, which is one of the major objectives in the UN’s MDG.
   ‘We hope we will soon be able to provide quality primary education to 100 per cent of the children in the country,’ Saifur added.
   Primary education has been given much importance in the budget with an allocation of Tk 5,400 crore to implement two projects — ‘Primary Education Development Programme-II’ and ‘Reaching out to School Children’.
   An additional amount of Tk 400 crore will be spent to provide stipends to 29 lakh female students under the Female Students Stipend Programme at the secondary level, said an apparently euphoric Saifur. He also proposed increase in the number of all scholarships at the primary and secondary levels by 10 per cent.
   The minister said the government has expanded the girls’ stipend programme up to the higher secondary level, and 55 lakh children in the primary education stipend project are receiving Tk 520 crore, a fund provided by domestic resources.
   He also proposed to increase the monthly general stipend for boys and girls, on the basis of results in the Higher Secondary Certificate examinations, by Tk 25 from the present figure of Tk 225. Five thousand girl students at the Bachelor’s level are receiving scholarships at present.
   The government will also bring 10,000 more girl students under its monthly Tk 200 scholarship programme to enable them to pursue their studies of specialised subjects at the Bachelor’s level in public universities, government and non-government colleges that are included in the monthly pay-order list.
   Girl students studying in public technical and specialised colleges and universities will come under the purview of this programme and enjoy tuition fee waiver simultaneously, said Saifur.
   Lauding the BNP’s policy of compulsory primary education, Saifur said the policy has made a radical change in enrolment in educational institutions, especially of girls.
   He told the parliament that girls’ enrolment at primary level has risen to 50 per cent from the 45.9 per cent of 1992. Fifty-three per cent of the students now enrolled at the secondary level are girls, and the pass rate of girls is higher than that of the boys, he said.
   The number of female teachers in the primary schools has almost doubled to 40 per cent due to the present educational policies.
   The government has also taken steps to expand technical education by modernising the polytechnic institutes and also by setting up new institutes, said Saifur.
   Three more polytechnic institutes will be set up for girls to enhance their participation in the technical sector, he added.
   The percentage of technical and vocational students will be increased to 25 per cent in 15 years from the present figure of two or three per cent at the secondary and higher secondary levels, said Saifur.
   Building of new infrastructure for both government and private educational institutions, repair and maintenance of existing buildings, recruitment of teachers and procurement of furniture and scientific appliances have been given priority under various projects for boosting secondary and higher education, the minister told the parliament.

The finance and planning minister, Saifur Rahman, on Thursday proposed a cut in tax on mobile handsets at the import stage from Tk 1,500 to Tk 300. However, he proposed imposition of a new tax of Tk 1,200 on every SIM connection.
   ‘I propose rationalisation of its duty structure as the demand for mobile phones has been growing steadily in the past few years,’ said Saifur. ‘Regardless of its import value, I propose a duty of Tk 300 per mobile set at the import stage and Tk 1200 for connection of each SIM card or similar technology at the local stage.’
   Mobile phone operators fear the new tax will impede the growth of the burgeoning mobile phone sector, which witnessed over a hundred percent growth in the last couple of years.
   ‘Any increase in tax on SIM card will increase the start-up cost of mobiles and this will limit people’s affordability,’ said Syed Yamin Bakht, general manager of information of GrameenPhone, the largest telecom operator in Bangladesh.
   Industry insiders said the move would choke the growth of the mobile phone users as the five mobile operators planned to invest heavily in infrastructure and network to raise the number mobile phone users to about 10 million by the yearend.
   ‘Rather the government should encourage the sector to grow faster as it would get more revenues through value added tax on airtime charges if there are more customers,’ said a top executive of AkTel.
   He said the SIM card tax would increase the cost of connection from Tk 300 to the Tk 18,00-2,000 mark. He said the four GSM operators would be most affected for the decision.
   However, Intekhab Mahmud, senior vice president of marketing of CityCell, which employs CDMA technology, welcomed the government move as he felt that it would eliminate the grey market of mobile phone handsets while customers will have more option in selecting their handsets.
   ‘As a CDMA operator, we will be benefited as we have to provide a connection to every handset and reduction of taxes on handset would reduce the start up cost,’ Intekhab said.
   He, however, said the GSM operators who have the option to sell SIM cards only, would be affected by the new tax.
   Intekhab felt that the tax should not be more than Tk 500 as the high price would be prohibitive for aggrieved customers to switch operators.
   NSM Faruq, managing director of Integra Communications, a handset importer, also welcomed the decision to reduce the handset tax. ‘We take the matter positively, as it has long been our demand to reduce tax on handsets.’
   He also demanded that the government should stop the import of refurbished mobile sets to give customers a taste of brand new sets.
   Most of the available handsets are refurbished sets, he claimed.
   Faruq, however, did not support the idea of taxing SIM connections, as it would impede growth in the mobile sector.
   There are about 5.4 million mobile phone customers in Bangladesh.
   According to industry insiders and sources in the mobile importers association, over
   80 per cent of the mobile handsets are smuggled into the country.
   Saifur has also proposed to increase the tax on mobile phone chargers to 15 per cent from 7.5 per cent.

Bangladesh plans to pursue duty-free access to the markets of the developed nations in the forthcoming second South Summit in Qatar next week.
   The prime minister, Khaleda Zia, is expected to leave for Doha on June 14 to attend the summit, where she is expected to speak on the first day of the two-day summit, which will be held on June 15-16.
   The foreign secretary, Hemayetuddin, at a press briefing at the Ministry of Foreign Affairs, said on Thursday that Bangladesh would also ask for linking the global trade agenda with the poverty reduction agenda in the summit, which will focus on ‘Development Challenges Facing the South’ .
   ‘New and additional resources should be allocated to enlarge the trade capacity of the least developed economies,’ he said.
   ‘Bangladesh will also argue for flexibility of rules of origin so that we can utilise the preferential treatment currently on offer,’ said Hemayetuddin. ‘We will pursue the issues we will raise so that they can be included in Doha declaration.’
   Apart from attending the summit, the prime minister will have bilateral talks with the Emir of Qatar, the King of Nepal and the prime minister of Malaysia.
   He said the Doha Summit would be a follow-up of the Havana Summit held in 2000, which was expected to forge a strong coalition to tackle the inter-related issues of aid and trade, which are of crucial importance.
   The second South Summit has special significance as it takes place ahead of the five-year review of the Millennium Development Goals due to be held in September in New York, and also the WTO ministerial meeting in Hong Kong in December.
   ‘Besides we will also focus on issues like environment, health and education, which are needed for achieving the Millennium Development Goals,’ said Hemayetuddin.
   He said the developed countries pledged in 1970 to disburse 0.7 per cent of their GDP as development assistance to the LDCs and developing countries, but the pledge has not yet been fulfilled.
   Currently, overseas development assistance stands at only 0.25 per cent.
   He said aid should be linked to specific needs of the recipient nations and the achievement of the MDGs.
   Bangladesh believes that if the developed nations had honoured their commitment of disbursing 0.7 per cent of their GDPs, the situation in the South would have been different.
   Ahead of the June 14-15 summit in Doha, a meeting of senior officials of participating countries will be held on June 12, to be followed by the minister-level meeting on June 13.
   The meetings will finalise the draft of the Doha Declaration and Doha Plan of Action. The meetings will also consider projects of South-South cooperation.
   The foreign minister, M Morshed Khan, and the foreign secretary will attend these meetings.

The main opposition Awami League straightway rejected the proposed budget for the 2005-06 fiscal year, terming it ‘daydreaming, deceiving and unrealistic’.
   ‘It is an unrealistic and daydreaming budget and will bring nothing good to the people,’ the Awami League’s Economical Cell chairman, Abul Mal Abdul Muhit, told a news briefing.
   In his instant reaction on behalf of the party after the finance and planning minister, M Saifur Rahman, had tabled the budget Thursday afternoon, Muhit found nothing new and anything better for the low-income group people in it. ‘It is simply anti-people.’
   ‘Budget is the directive of a nation and it would be much better if such unrealistic budget would not be placed,’ he told the briefing at the Dhanmondi office of the party chief, Sheikh Hasina.
   The AL general secretary, Abdul Jalil, leaders Amir Hossain Amu, Tofail Ahmed, Matia Chowdhury, Abdul Hamid, Mohammad Nasim, Obaidul Kader and Abu Sayed were also present.
   Muhit, also a member of the Awami League’s advisory council, criticised Saifur for ‘the very short budget speech’ and not giving any direction to employment generation for youths.
   A former finance minister of the military dictator Ershad’s government, Muhit, also blasted Saifur for what he said trying to copy the Awami League budget, placed in parliament four years back, by the then finance minister Shah AMS Kibria.
   ‘The finance minister, through the Poverty Reduction Strategy Paper, emphasised achieving the millennium development goals, set by the AL government in 2000, but failed to bring consistency with the targets, particularly in terms of poverty alleviation.’
   The countrymen have been suffering a lot for the price hike of essential commodities and their miseries would be intensified once the budget is passed.
   ‘Saifur proposed supplementary duty on salt and his government allowed opening of three lakh letters of credit (LCs) before placing the budget. It is nothing but to cheat the nation,’ Muhit said.
   Also, criticising Saifur for the ‘huge’ Annual Development Programme, Muhit said it would be impossible to implement such an ADP. ‘They could implement ADP of maximum Tk 12,000 crore in the last two fiscal years.’
   In the name of block allocation for Gram Sarkar, the government has paved the way for plundering money by its men in rural areas, he said.
   ‘Previously allocations were made through institutions like union parishad, which is now being taking place through the leaders and activists of the ruling Bangladesh Nationalist Party,’ he said.
   The Awami League, meanwhile, held a rally in front of its Bangabandhu Avenue central office and took out a procession in the evening rejecting the proposed budget.

The business leaders expressed mixed reaction about the proposed budget for the next fiscal.
   The proposed budget does not have measures that may affect local industries or their export competitiveness, said president of the Federation of Bangladesh Chambers of Commerce and Industry, Abdul Awal Mintoo.
   Mintoo said import duties on industrial raw materials should have been reduced to 5 per cent from the present 7.5 per cent to increase export competitiveness. ‘With the existing duties on imported raw materials, add to it problems of inefficient infrastructure like ports and roads, we would not be able to compete in the international market.’
   Mintoo said duties and taxes in some cases, such as motor vehicles have been increased, but the measure would affect only a few.
   He noted that the budget proposed to increase supplementary duties in a few cases, but all for the protection of local industries.
   ‘One can say it is a pro-election budget,’ said Mintoo. Investment in rural infrastructure is also important, but the disbursement of allocation should not be discriminatory, he cautioned.
   The Bangladesh Chamber of Industries called for withdrawal of import duty on basic raw materials, claiming that it would be impossible for entrepreneurs to survive in the competitive international market with a 7.5 per cent duty.
   ‘Twenty-five per cent import duty is already there on readymade products along with a 7.5 per cent import duty on raw materials. The gap is 17.5 per cent which is illogical,’ said BCI president, AK Azad, in a statement.
   He also called for raising the ceiling of individual taxable income to Tk 1,50,000 from Tk 1,20,000.
   The Bangladesh Garment Manufacturers and Exporters Association and the Bangladesh Textile Mills Association congratulated the finance minister for his budgetary measures for poverty alleviation and employment generation.
   The garment manufacturers also hailed the continuation of tax holiday on textile, high-value readymade garments, textile machinery, boilers and compressors up to 2008, five per cent cash incentive to the textile sector and allocating Tk 50 crore for garment workers training, said a press release of the association.
   In a statement, the textile manufacturers’ association president, MA Awal, however, said concessionary rate of customs duty for some essential dyes and chemicals would not be helpful for the textile sector as the entrepreneurs will have to pay 32.5 per cent duty even after the concession.
   Both the associations demanded 15 per cent cash incentive and withdrawal of duty on dyes and chemicals.
   The Chittagong Chamber of Commerce and Industry president, Saifuzzaman Chowdhury Zabed, thanked the finance minister for doubling agricultural subsidy to Tk 1,200 crore in this regard.

Two more suspected criminals were killed in ‘encounters’ with Rapid Action Battalion in Dhaka and Pabna early Thursday, raising the ‘crossfire’ death count to 331 since June 2004.
   Mohammad Bahauddin alias Bahu, 30, an accused in a dozen of criminal cases, was killed at Shimulia in Dohar of Dhaka while Mohammad Jahit alias Jait, accused in two sensational murder and two other cases — at Shibpur in Ataikula upazila of Pabna, RAB said.
   They said Bahu, arrested from Fakirerpool in the capital on Wednesday, and Jait, arrested earlier from Sreepur in Ataikula, were killed during gunfights between criminals and the RAB personnel.

The actual defence allocation in the proposed national budget for 2005-06 appears ambiguous.
   The finance and planning minister, M Saifur Rahman, has proposed Tk 4,320 crore for the defence budget, which is 6.7 per cent of the total budget outlay.
   The allocation sees an increase of Tk 205 crore over the revised figure of outgoing fiscal year.
   The original allocation was Tk 3,901 crore in the 2004-05 fiscal year, which was revised upward to Tk 4,115 crore.
   The budget in brief, however, showed 5.8 per cent of the total recourses will be spent for defense purpose as it puts the allocation for defence ministry at Tk 4,243.
   But the demand for grants and appropriations inflate the defence spending projections to Tk 5,075.88 crore, including Tk 5,000.71 crore as non-development expenditures and the rest Tk 75.17 crore as development spending.
   However, in the budget summery, the non-development defence spending stands around Tk 4,320 crore.
   The defence sector, however, is likely to receive Tk 653.15 crore from the United Nations for participation in the peacekeeping missions in the next fiscal. The amount was Tk 547.9 crore in the last fiscal.
   On the other hand, issues like law and order and public safety have not given enough importance while defense allocation is increased. Spending for public order and security including police force has accounted for only 4.8 per cent of the total allocation.