Recently, Petrobangla has proposed Bangladesh Energy Regulatory Commission (BERC) to double the per unit industrial gas price and captive consumers of gas from Tk 30 and Tk 31.50 to Tk 75.72, respectively to reduce government subsidy on gas.
Moreover, the National Board of Revenue (NBR) has already decided to increase income tax on motorcycle, refrigerator, air-conditioner and compressor industries from 10 percent to 20 percent.
Dhaka Chamber of Commerce and Industry (DCCI) has expressed deep concern over the negative impact of such decision on the country's overall business activities as well as on local and foreign investment. If the gas price hike proposal is accepted, the cost of production in industries will subsequently increase and will create inflationary pressure.
It is also necessary to maintain a stable and investment-friendly environment by ensuring long-term tax benefits and commitment to policy continuity in expanding trade and investment for a sustainable economic growth.
The proposal to increase the price of gas by more than double without ensuring uninterrupted gas supply is undoubtedly a challenge for the industry which will push the cost of doing business to rise manifold.
DCCI feels in the current economic scenario, such price hike of gas will impact the overall investment climate, reduce the possibility of setting up new industries and hinder the business operations of existing investors.
As a result, the production cost of export-oriented industries will increase significantly, which will weaken Bangladesh's export competitiveness in global market and discourage local and foreign investment in the country.
In the prevailing unstable economic situation, the proposed gas price hike and increased VAT and tax rate on various products will create a challenging situation for the overall economy, reducing the country's competitiveness in global market.
Therefore, DCCI believes it is necessary to take joint initiatives by the government, private sector and concerned stakeholders to overcome the existing economic challenges by ensuring a cost effective business-friendly environment in the country.
Also, tax rate hike on manufacturing motorcycles, refrigerators, air conditioners and compressors amid the present economic situation is very unfriendly for industries amid a promise of tax benefit in the mentioned sectors until 2032.
If the government retracts from this promise in the midway, it may bring in a detrimental message to both local and foreign investors as an "inconsistent policy" promise. Foreign and local investors will be in a doldrums in the process.
Dhaka Chamber of Commerce and Industry (DCCI) has therefore urged the BERC and Petrobangla to reconsider the proposal for gas price hike when the country's economy is reviving against multiple challenges.
At the same time, DCCI has requested the government to halt the move of increasing VAT and tax rate to reduce pressure on business operating costs and overall inflation.
