Lack of rule of law hinders FDI
Staff Reporter :
The Chairman of the National Board of Revenue (NBR), Md Abdur Rahman Khan, has pointed to the absence of good governance and the rule of law as the primary reasons for the relatively low Foreign Direct Investment (FDI) in Bangladesh.
Speaking at a discussion meeting on the Income Tax Law 2023: Reform and Perspective at the Revenue Building on Wednesday, Khan stated, “For FDI, Bangladesh is not comparable with its competitor countries. One of the main reasons is the absence of good governance, and we are not focusing on the issue.”
He emphasised that Bangladesh’s failure to offer adequate services to foreign investors and the weak enforcement of existing laws are significant deterrents for FDI.
“The rule of law is totally absent. We are very weak in implementing existing laws, and this is evident in all sectors,” he said, highlighting that this is a crucial difference between Bangladesh and more developed nations.
Despite Bangladesh having numerous laws in place, Khan criticized the country’s lax approach toward implementing them, stating, “We have many laws, but we have laxness in materializing those. This is an area we need to address.”
The NBR Chairman also touched upon the country’s low revenue collection, admitting that it falls short of expectations. “There are many reasons behind this. One major factor is the culture of tax exemptions that has persisted for a long time. We must gradually move away from this culture,” he said.
Khan highlighted that Bangladesh still generates two-thirds of its total revenue from indirect taxes, which he argued disproportionately burdens the poor. He stressed the need to increase income tax collection to improve the tax-to-GDP ratio.
To achieve this, Khan proposed strengthening the tax system by focusing on digital, faceless services for taxpayers. “By ensuring a faceless service system, we can seal the system of pilferage and stop revenue leakage, ensuring proper revenue collection,” he explained.
In terms of improving service delivery and efficiency, Khan called for greater accountability among revenue officials. He also mentioned the potential separation of the policy wing from the revenue collection wing, stating that this initiative would help streamline operations and increase revenue collection. “The law for this separation will be passed by the advisory council before Eid, as Chief Adviser Professor Muhammad Yunus assured me,” he added.
The event was organized by the BCS Taxation Association, with its president Barrister Mutasim Billah Faruqui presiding over the session. The keynote paper was presented by Iqtiaruddin Md. Mamun, Commissioner of Tax Zone-6, while Syed Mohidul Hasan, Secretary General of BCS Taxation Association, gave the welcome address.