The New Nation - Internet Edition

UNB, Dhaka

Jonathan C. Dunn, IMF representative in Dhaka, Sunday suggested the government to reform the country's two decades of Value Added Tax (VAT) system to match global standard.

Dunn however hailed the National Board of Revenue (NBR) saying the revenue agency has crossed its revenue collection target for the first time.

"But the current VAT system needs to be reformed, as the value added tax in Bangladesh is actually one kind of excise tax," he said while speaking at the monthly luncheon meeting of Foreign Investors' Chamber of Commerce and Industry (FICCI) at Sonargaon Hotel.

He said the VAT system in Bangladesh is still not friendly for the businessmen and commoners.

"I request the government to liberalise the VAT system. It has to be designed properly so that the businessmen and others have easy access to the system," he said.

Dunn further asked the government to formulate tighter monetary

policy as what he said was the "present policy is much expansionary

for dealing with the soaring inflation".

He said the country's medium-term outlook is positive although inflationary pressure still remains a major challenge to the economy.

He voiced concern over the current political uncertainty, saying the issue has remained still a big obstacle to the both Foreign Direct Investment (FDI) and domestic investment.

He also asked the NBR authorities to ensure transparency of the tax collectors to shore up the revenue collection.

FICCI president Wali Bhuiyan said if Bangladesh want to attain double-digit economic growth rate in near future it has to overcome the political instability and the country's law and order situation will have to be improved.

He was also critical of the country's governments for its weak management of macro economy, which has been facing challenges due to lack of food security and soaring price of essentials.

Since long, the IMF has been recommending the government to widen the VAT net bringing new sectors into the tax system and eliminate tax and VAT exemptions. According to IMF observation, Bangladesh's economy bounces backed quite well in the second half of the last fiscal.A strong revival in domestic economic activity and rapid growth in garment manufacturing and remittances enabled the country to grow by more than 6 percent in 2007-08 fiscal year.