Finance Minister AMA Muhith has proposed a spending of Tk 145.65 billion for defence sector in the 2013-14 budget

The present fiscal's defence allocation is more than those earmarked for health, social security and welfare, energy and power.

“We are committed to build a strong and modern defense force capable of meeting the challenges of the 21st century,” Muhith said in his budget speech.
The allocation is 6.51 percent of the proposed Tk 2.22 trillion budget.
The health sector will receive 4.27 percent in the proposed budget while energy and power 5.10 percent and social security and welfare 5.68 percent.
The minister said they had taken steps to modernise the armed forces and enhance operational capacity of units and headquarters.
“We have formed a Naval Commando Unit and started procuring key hardware to modernise our navy,” Muhith said.
In order to strengthen and enhance operational capacity of the Air Force, he said, a new air base has been established and new combat aircrafts and helicopters are being added to the fleet.
Bangladesh tops the list of countries sending troops to the UN peace keeping mission.
The minister said currently 6,987 Bangladeshi peace keepers were engaged in UN peace keeping missions.
In the first three years of the current government, he said, Bangladeshi peace keepers earned foreign exchange equivalent to Tk 53.54 billion.
The earning is Tk 5.61 billion in this year.

Finance Bill spells out a ‘special’ provision for whitening black money through real estate

He said the government had extended facilities for investment of undisclosed income “which did not yield any tangible outcome”.
“The current regulatory regime stipulates that such undisclosed income can be invested by paying extra 10 percent tax together with applicable tax rates which may come around to 2.5 percent of income,” said AMA Muhith.

“Considering the difficult period experienced last year we have allowed special facilities for investing in plots or flats.”
This special facility, it turns out, would be payment of taxes at stipulated rates for “construction or purchase” of residential building or apartment. People would also be allowed to legalise untaxed money through land purchases.
The bill stipulates a tax of Tk 5,000 for 1 square metre (just over 10 square feet) for houses on three katha plots (200 square metres) or smaller in Gulshan, Baridhara, Banani, Motijheel and Dilkusha.
For plots over three kathas in these areas, the stipulated tax will be Tk 7,000 per square metre.
The Finance Bill reads, “Notwithstanding anything contained in this Ordinance, source of any sum invested by any person, in the construction or purchase of any residential building or apartment, shall be deemed to have been explained if the assessee pays, before the assessment for the relevant assessment year in which the investment is completed, tax at the following rate…”
For building or apartments — on three kathas or less — in Dhanmondi, DOHS, Mahakhali, Lalmatia, Uttara, Bashundhara, Cantonment Karwan Bazar, Bijoynagar, Segunbagicha, Nikunja of Dhaka and Panchlaish, Khulshi, Agrabad and Nasirabad of Chittagong, the applicable tax rate will be “taka four thousand per square meter in the case of a building or apartment the plinth area of which does not exceed two hundred square metre”. For real estate over three kathas, the tax will be Tk 5,000 per square metre.
This rate comes down to Tk 2,000 for three-katha plots and Tk 3,000 for those over three kathas within city corporation areas other than those mentioned.
As for real estate in municipalities the applicable rate will be Tk 1,000 per square metre for houses in three-katha plots (or smaller) and Tk 2,000 for plots over three kathas.
For apartments or buildings in any other area the applicable taxes will be Tk 700 for the smaller plots and Tk 1,000 per square metre for houses on over three kathas.
But the applicable rates would be 20 percent higher if it is for more than one apartment.
In case of land purchase the applicable rate would be 10 percent of the price of land and 20 percent higher if there are two or more plots involved.
These privileges will not be applicable if the apartment or piece of land is bought with money from criminal activities or illegitimate source.

Bangladesh has been designated as the ‘Theme Country’ of the first China-South Asia

The Ministry of Foreign Affairs sees this recognition as a testimony to Bangladesh’s potential as ‘an emerging economy’ in the South Asian region.
The objective of the exposition is to strengthen trade relations between China and South Asian countries and to provide a platform to expand economic and commercial exchanges with other countries and regions.
Kunming, the capital of Yunnan province, is the gateway to China for South Asian countries.
All SAARC countries –Bangladesh, Afghanistan, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka – are also participating in the fair.
The Prime Minister of Sri Lanka D M Jayaratne, and the Vice President of Nepal Paramanda Jha are leading their delegations while President of Malawi Joyce Banda, and the former Prime Minister of Malaysia Mahathir Bin Mohamad are also attending the fair.
Bangladesh officials from the Ministry of Foreign Affairs, Ministry of Commerce and Export Promotion Bureau are also attending the events.
Vice Premier of China Ma Kai visited Bangladesh pavilion in the expo on the opening day and termed Bangladesh a “close friend and neighbour” of China.
He assured Bangladesh of “further assistance and support” in the days to come.
Minister for Industries Dilip Barua and Prime Minister’s Advisor to International Affairs Gowher Rizvi greeted him on his arrival in the pavilion.
Ma Kai also congratulated Bangladesh on being designated as the Theme Country of this inaugural exposition.
Bangladeshi exhibitors and businessmen are using 150 booths to display and sell their products.
The two-way trade between Bangladesh and China crossed $8 billion last year which was less than $ 3 billion three years back.
The Industries Minister expressed hope that soon the figure would pass the $10 billion mark.
The minister said Bangladesh holds great potential for itself as well as its neighbours.
He underscored the need for opening ‘without further delay’ communication channels between south and south-west China and Bangladesh, through Myanmar.
The minister later spoke at the 8th China- South Asia Business Forum (CSABF) on Thursday.
Representatives of different Bangladesh’s Chamber bodies including Bangladesh Federation of Chamber of Commerce Industries, Dhaka Chamber of Commerce Industries, Specialized Textile and Handloom Industries Association, and Women Chamber have attended the business forum.
The fair will through to June 10.

Bangladesh has entered into a $300 million framework loan arrangement with South Korea

Under the “Framework Arrangement concerning Loans from the Economic Development Cooperation Fund (EDCF)”, Seoul will provide the money in different projects in Bangladesh during 2012-2014 period.

South Korean Ambassador Lee Yun-young and Bangladesh’s Economic Relations Division Secretary Md Abul Kalam Azad signed the agreement in Dhaka on Thursday.

According to the Korean embassy, in the first phase of the EDCF implementation, wireless broadband network for ‘Digital Bangladesh’ project worth $77million will be launched shortly.

Bangladesh is one of the major Korean development funds recipients.

This year marks the 40th anniversary of the diplomatic relations between the two countries.

Tax, more tax Finance Minister AMA Muhith needs

The government has depended heavily on income and value-added taxes to attain its ambitious revenue goal.
Finance Minister AMA Muhith hiked duty on imports of various items, including powder milk and newsprint for newspapers. The hikes are likely to hurt newspaper readers and families that have to depend on imported milk for their children.
Muhith also increased so-called package VAT for small traders, wholesalers and shopkeepers, in a desperate bid to reach the revenue target set at Tk 136,090 crore for the next fiscal year.
Muhith legalised undeclared or black money, earned mostly through corruption, without question for purchases of apartments and lands in a bid to collect more money to raise finance for the budget.
Smokers will fall out with the minister as he increased taxes on cigarettes and bidi, one of the biggest sources of revenue. And cigarette makers will have to pay more corporate taxes.
Listed telecom operators, with only Grameenphone now in the market, will have to pay 40 percent corporate tax, up from 35 percent now.
But many of his measures, such as extension of tax breaks and benefits of reduced tax for the next two years to June 30, 2015, will boost domestic industries. Muhith also rolled out a host of other measures including higher duty on finished products and reduced duty on raw materials imports.
Although he raised the tax-free income limit for individual taxpayers to Tk 2.2 lakh from Tk 2 lakh, inflation will eat into the benefits.
The minister recommended cutting the existing minimum tax to Tk 2,000 from Tk 3,000 for people in district towns and for taxpayers in suburbs and villages — from Tk 3,000 to Tk 1,000.
But the minimum tax for taxpayers living in metropolitan areas remains unchanged.
“Such reduction in payment of minimum tax, I believe, would motivate the taxpayers in the rural areas to pay tax with effectual impact in widening the tax net,” Muhith said.
He made an attempt to make big businesses happy by keeping corporate tax largely unchanged.
DUTY MEASURES
Muhith left the existing duty-structure largely untouched as he cut duties only in two areas. He reduced import duty from 3 percent to 2 percent on capital machinery and from 12 percent to 10 percent on intermediate raw materials.
But importers of finished goods will continue to pay 5 percent regulatory duty on goods on top of 25 percent customs duty — a measure designed to safeguard the domestic players.
Muhith rationalised the present nine-slab supplementary duty structure to discourage infiltration of socially undesirable and luxury goods and to protect the domestic industries.
These measures will fuel the prices of imported float glass, billets, gas cylinders, potato chips and mosquito coils.
On the other hand, the prices of woven fabrics, digital cameras and web-cameras, server rack, solar lanterns and LED lamps, SIM cards, windshield glasses and minibus chassis, generator parts, fire extinguishers, raw materials of biogas plant and milk tankers will come down.

Prime Minister Sheikh Hasina tells ALPP meet JS polls by Jan 25 next year

Prime Minister Sheikh Hasina yesterday said the last workday of the ninth parliament would be October 25 and the next general election would be held by January 25 next year under an interim government formed with elected representatives from parliament.
Addressing a meeting of the Awami League Parliamentary Party (ALPP) at the Jatiya Sangsad Bhaban, Hasina said the national polls would be held in line with the constitutional framework, meeting sources quoted her as saying.
Sources added that Hasina hoped all political parties would take part in the general election.
Sheikh Hasina, who is Awami League president, directed all her party lawmakers to take full preparations for the forthcoming polls and highlight the developments brought about in their constituencies.
She also asked them to make people aware about the BNP,
Jamaat-e-Islami and Hefajat-e Islam’s violence, added the sources.
She said nominations would be given on the basis of recommendations of the party grassroots.
The prime minister also instructed party lawmakers not to deliver aggressive speeches in parliament, for that might lead to a walkout by the BNP lawmakers, an MP requesting anonymity.

Jatiya Party chairman Hussein Muhammad Ershad Cinderella complex

AMERICAN psychotherapist Colette Dowling coined the phrase Cinderella complex, which basically means an unconscious desire of a person to be taken care of by others. The complex is said to become more apparent as a person grows older, and last week it was proven when Jatiya Party chairman Hussein Muhammad Ershad threw a challenge at both BNP and Awami League. He said that these two parties together would not be able to defeat him if the presidential form of government was restored and he contested for the top job. Between the lines, Ershad was pleading others to take care of his wishful thinking.

The first thing about Ershad’s challenge is that it is a sign of deep psychosis. There are unhappy citizens in this country, who in their desperate moments of despair, talk about voting for the former military strongman. I know it because I have heard it myself on several occasions at social gatherings. People, who are fed up with the ruling and opposition leaders, vent their frustrations by vowing to vote for this deposed dictator.

Does that mean people of this country want him back? Let me give you a hint. When someone commits suicide, it is not because that person loves death but because that person hates life. If Ershad is inspired by his ersatz popularity, it is not because people think of him as their choice but because they do not have any choice whatsoever. The psychosis goes even deeper. It shows this man is inordinately focused on himself. He is more interested in his election as the next president of Bangladesh than leading his party to success.

If anybody has followed Ershad for last four years, he has been all over the political landscape. It has been more difficult to hold him to any particular commitment than catching a fly with a pair of pincers. He must have vowed an umpteen number of times to leave the Grand Alliance. Then he always returned to its fold like a cat, which taken away from home, comes back from anywhere.

Why should people vote for him is the question he needs to ask himself. He has run this country longer than any other ruler in one long stretch of nine years. But what is the one thing for which he stood out then and also in the political ruckus of last four years? How has his previous experience shaped his performance this time as a partner in power? If anything, he has convinced us of his evermore burning desire to return to power for one last time.

Ershad has his reasons for this desperation. He wants to erase the stigma associated with his name for grabbing power as a military ruler and then being forced to abdicate in disgrace. He is also the only ruler in this country, who has served prison sentence. One cannot blame him for hanging around the corridors of power at the ripe age of 83. He has even made a dash to Delhi, all with the instinct of a compulsive gambler who loses more money under the illusion that one good hand will recover the entire loss.

Perhaps it takes a special kind of people to hanker after power even in their sunset age. It may be the same reason why werewolves howl during a full moon, or peacocks cry before rains. Perhaps it is only natural that powerful people should seek power like mobile phones need recharge. It must be a pathological thing without which they feel helpless like the Wizard of Oz bereft of his wonder machine.

There was an urgent appeal in Ershad’s cogent challenge, a sense of destiny ringing through it. At his age, even a superman cannot but think of death. So his politics must be sharpened to one very last chance, not so much to enjoy the trappings of power again but to unburden himself of the ignominious baggage he has been carrying from the past.

US President John F Kennedy was once asked what he would do with his life after he left the White House. His replied that he did not know because he would be at the awkward age, too young to write his memoirs and too old to start a second career. Kennedy’s contradiction was resolved by an assassin’s bullet that snuffed out his life before getting to that stage.

Ousted from power 23 years ago, Hussein Muhammad Ershad had plenty of time to write his memoirs, but he wasted it planning a second career to return to the first. Meanwhile, people wonder what happened to his flair for writing poetry after he was forced to resign. If his treatment of poetry is any hint, it can be extrapolated to understand his position on other things in life. In commitment or challenge, can this man be taken seriously?

2013-2014 Budget Finance Minister AMA Muhith tries to make all happy; rides high on spending, low on earning

The grander your plan is, the more targeted and specific your actions have to be.
Finance Minister AMA Muhith in his last budget showed the grandeur of his wishes against all odds — a high growth of 7.2 percent, a big revenue growth of 20 percent, a bridled inflation of 7 percent and so on.
But he probably forgot to mention what specific actions he proposes to make them come true.
An election year budget it truly is as he has only shown how significantly he is going to cut down on duties, but he has not hinted where the pains will come from.
He has offered his last caring hand for industries of a wider range — from ceramics to ship-building, from poultry to steel re-rolling. The finance minister has offered a Tk 2,592 crore export incentive too. But how that money will be spent is unclear.
Muhith has also tried to curl his arms around the farmers and socially disadvantaged groups.
Despite that, one would tend to be sceptic.

Is duty relief the only way to foster industry, as he wishes to push its share in GDP from 30 percent to 40? Will that ease the cost of doing business if governance is left unattended? How will credit interest rates come down? And the often asked question — are the safety network programmes effective?
These are some of the unanswered questions.
The finance minister’s opening remarks that he had placed his first budget with a vision of “high performance growth” and stabilisation of commodity prices also looks unfulfilled four years down the line.
Growth has dipped for the second consecutive year and his new budget has infused little vision of how that magic growth will come.
And the economic survey accompanying the budget documents shows private investment has gone down significantly this year to 18.99 percent of GDP from last year’s 20.04 percent. The budget has not come up with any innovative investment plan.
His only explanation for growth that there would be a global turnaround to yank the economy up is a matter of high risks. Muhith also banked on agriculture, to which he has also slopped chunks of money. But incremental growth from the slowing down sector needs incremental investment in research, which the proposed budget has not promised much.
Muhith’s high expenditure budget should have explained high revenue collection drive too. He has made mention of “comprehensive reform initiatives”. But when one turns to his “future plans’, only two short paragraphs look up, mention of things like “utmost sincerity and integrity”, commitment to “build a happy and prosperous Bangladesh”, “remarkable success” and so on. Only a lot remains unanswered.
Such vagueness poses remarkable threats to macro-economic stability since there should have been clearly outlined contingency plans in case of revenue failure because of future threats of political unrest.
To finance his big budget, the finance boss has thought up a big $3 billion foreign financing, which might be too ambitious. This is because even this year, when project aid performance was good, foreign financing did not reach that amount. And in an election year, how much foreign funds can be mobilised is an open question. There is no clear statement on improved ways of aid mobilisation.
There are also no new thoughts on improving ADP implementation, though the size of the development budget is huge.
Muhith’s boost for industry deserves a pat in the back. Cleverly designed, it protects the domestic industry on a wide scale and at the same time plays to the IMF’s demand for liberalisation.

Padma bridge to choke other projects Fund crisis to delay road development

About 80 percent of the projects aimed at developing the country’s road network are facing delays due to fund crisis and inefficiency, adding to project costs.
This trend is likely to continue since the Padma bridge project is getting the lion’s share of the allocation in the transport and communications sector. The Padma bridge alone got an allocation of Tk 6,852 crore, out of Tk 7,000 crore given to the bridges division, in 2013-14 fiscal year.
The construction of the bridge is expected to begin later this year.
The roads division in 2013-14 fiscal year got Tk 177 crore less than Tk 3,634 crore, which it had in 2012-13.
The allocation was slashed even after the communications ministry has fears that people will get disappointed in the final year of this government’s tenure in case some major projects are not implemented.
Prof Shamsul Haq of Buet said dependency on foreign aid in implementing the major infrastructure development projects would go on. He emphasised the need for timely maintenance of roads and highways.
He suggested that the government inject enough funds in road expansion projects like Dhaka-Chittagong and Dhaka-Mymensingh highway widening projects. “Otherwise, people will continue to suffer.”
While preparing this year’s annual development programme, directors of different ongoing projects under the Roads and Highways Department asked for Tk 7,000 crore.
In addition, the ministry demanded Tk 12,000 crore over the next few years to complete 18 mega projects.
The slow progress of different projects and inadequate fund allocation indicate that many important roads and highways development projects will not be completed timely and some could even stall due to fund shortages.
The Dhaka-Chittagong dual carriageway project is a glaring example. It already got time extension twice, escalating cost by Tk 1,000 crore.
The project to upgrade the Jatrabari-Kanchpur road into eight-lane is set to have the same fate.
Every year the ministry aims at finishing a number of projects and reduce the backlog of unfinished jobs. The target has never been achieved.
Hatirjheel project, Cantonment-Mirpur flyover and construction of some other roads and bridges have been completed while work on Hanif flyover, Mouchak-Moghbazar flyover, Kuril flyover, Dhaka-Mymensingh dual carriageway project was underway.
The Dhaka Elevated Expressway project, however, remains uncertain.
Out of 172 projects, the ministry completed only 18 projects in 2011-12 fiscal year. The ministry is facing challenges to finish its targeted 30 projects, out of 155 projects in 2012-13 fiscal year.
Despite this, communications ministry officials believe that they would be able to finish some of the projects to create a positive impression about the ministry’s performance.
In the budget, the finance minister gave special emphasis on road maintenance and road safety.
POOR SHOW IN PPP
While the roads and highways sector suffered hugely due to crisis of funds, the government failed to spend a single penny allocated for Public-Private Partnership (PPP) scheme in the last four years.
The government first attempted to spend Tk 2,700 crore for the Dhaka Elevated Expressway but could not do so as the project was not readied for construction.
The government’s inefficiency and land-acquisition related problems are the reasons behind the failure of PPPs.
The finance minister yesterday admitted that the PPP initiative could not make much headway.
“It took quite a while to establish the new PPP office,” Finance Minister AMA Muhith said in his budget speech.
Muhith rolled out the idea in his first budget speech in 2009-10 to encourage private sector’s involvement in infrastructure projects.
The government has even failed to finalise the law for PPP, which is still pending with the cabinet.
However, the finance minister said the selection process of PPP projects has gathered pace. Until mid-May this year, 30 projects have been selected, of which 17 have been listed, consultants have been appointed in 14 projects and implementation has begun in six projects.
Besides political tension, analysts say that the government’s failure to operate PPP has affected the overall investments in the country.
“Inability to operate the much hyped PPP is the most critical factor which affected private investment expansion,” said Debapriya Bhattacharya, distinguished fellow of Centre for Policy Dialogue.

Jamaat-e-Islami leader Muhammad Kamaruzzaman challenges war crimes verdict

Jamaat-e-Islami leader Muhammad Kamaruzzaman on Thursday challenged the death penalty awarded him by a war crimes tribunal for his crimes against humanity during the 1971 Liberation War.

Claiming himself innocent, the assistant secretary general of Jamaat termed the verdict a “wrong judgement” and appealed with Appellate Division of the Supreme Court for his acquittal from all the five charges which were proved before International Crimes Tribunal-2.

The tribunal on May 9 sentenced him to death as it found him guilty of committing crimes against humanity in 1971.

Kamaruzzaman’s lawyers led by advocate Tajul Islam submitted a 105-page appeal along with different other documents to the office concerned of the Appellate Division.

In the appeal, the Jamaat leader said the tribunal sentenced him to death on the basis of hearsay statements of the prosecution witnesses.

The judgement is not tenable in the eye of law because it is wrong judgement, the appeal said.

Tajul Islam, the convict’s lawyer,that the SC will now fix a date for hearing on the appeal.

MK Rahman, additional attorney general and also chief coordinator of the prosecution team on Wednesday that the government would not file any appeal challenging the acquittal order of the tribunal in two other charges brought against Kamaruzzaman.

They will oppose Kamaruzzaman’s appeal before the SC, Rahman said.