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Mobilization of Resources for Sustainable Economic Development CONTENTS April-June 2010 The Bangladesh Accountant Bangladesh The 67 Vol. 2010 April-June No. 38 Mobilization of Resources for Sustainable Economic Development CONTENTS EDITORIAL April-June 2010 Vol. 67 No. 38 Mobilization of Resources for Sustainable Economic Development 01 ACCOUNTANCY Editorial Board Global Branding of Chartered Accountancy Chairman: M Farhad Hussain FCA Profession in Bangladesh 03 Dr. Jamaluddin Ahmed FCA Associate Editor: Harun Mahmud FCA Role of Chartered Accountants in the Mobilization Members of National Resources 06 Md. Abdus Salam FCA Dr Atiur Rahman Md. Shahjahan Majumder FCA Audit Committee, Independent Director, Bangladesh Perspective 08 Md Abdus Salam FCA FCS Showkat Hossain FCA BUDGET & ECONOMICS Masih Malik Chowdhury FCA Value Added Tax in Bangladesh - An Effective Way Anwaruddin Chowdhury FCA of Internal Resource Mobilization 11 ASM Nayeem FCA M. A. Baree FCA Dr. Md. Abu Sayed Khan FCA Marginal Workers’ Benefits: The Lone fat in Company’s Income Statement! 16 Md. Humayun Kabir FCA Mohammad Zahid Hossain FCA Akhter Matin Chaudhury FCA Analysis of the National Budget of Bangladesh 2010-11: Excellences and Constraints 18 Parveen Mahmud FCA • Md. Hafij Ullah Abdur Razzaque Mollah FCA • Monir Ahmmed Md. Abdur Rashid FCA • Abu Hanifa Md. Noman Bin Alam M A Baree FCA FINANCE & BANKING Md. Nurul Haque FCA Macroeconomic Situation 25 An overview of the Ministry of Finance, GOB Kazi Ehsanul Huq FCA A Comparative Analysis of Interest Rate Parity and Md. Akbar Hossain FCA Sticky Price Model of Exchange Rate 36 Md. Sayeed Ahmed FCA Chowdhury Rajkin Mohsin How to Increase Tax Revenue: Improvement of Enabling Md. Jakir Hossain FCA Environment, Application of Strategic Management Approach 42 M. Abu Bakar FCA Moslehuddin Khaled Mohammad Kamrul Hasan FCA Improving Financial Resources Mobilization in Developing Countries and Economies in Transition 48 Md. Kahir Mahmood FCA Suresh N Shende Mizanur Rahman Khan FCA HUMAN RESOURCES Pradip Paul FCA Development Strategies, Governance and Human Mohammed Jashim Uddin ACA Development-Bangladesh Perspective 61 Md. Rokonuzzaman ACA Dr. Shamsul Alam Md. Selim Reza ACA Human Resource Accounting in the Context of External Financial Reporting—An Analytical Study 68 Md. Yasin Miah ACA Dr Dilip Kumar Sen Mohammad Mazharul Haque ACA HR Practices in Industrial Enterprises in Bangladesh: An Approach to Factor Analysis 79 Member Secretary • Dr. Mir Mohammed Nurul Absar N I Chowdhury FCA, Secretary-ICAB • Balasundaram Nimalathasan and • Ratna Dutta ACA Published by the Editorial Board of the Council, the Institute of Chartered Accountants of Bangladesh (ICAB) 100 Kazi Nazrul Islam Avenue, Dhaka 1215 Tel: 9117521, 9112672, 9115340, 9137847 Fax: 880-2-8119399 E-mail: [email protected] Website: www.icab.org.bd Editorial Mobilization of Resources for Sustainable Economic Development esource mobilization is the fundamental generate revenues, detecting tax evaders, expanding prerequisite to achieve a balanced the tax net and undertaking procedural and economic growth and just and equitable administrative reforms. R society free of poverty. Resource mobilization and investment have been highlighted The budget for the fiscal 2010-2011 outlined some as the most vital input of the budget strategy in fiscal strategies to gear up resource mobilization as 2010-2011 aiming to achieve a GDP growth rate of follows: 6.7% by the end of the fiscal and reduce poverty to 1. Imposition of Value Added Tax on any purchase at least 50% by the year 2015.Growth, Human of goods or services through tender by development and Governance are the three Government organizations, Semi-Government fundamental factors that influence employment organizations, autonomous bodies, NGOs, generation, nutrition, maternal health, quality of Banks, Insurance companies or any other education, sanitation, safe water, local governance financial institutions, limited companies and and human resource development. But without a educational institutions. successful resource mobilization strategy and its 2. Inclusion of some additional goods and services implementation, growth, human development and under the VAT net. -Increase of Tariff Value of governance are very difficult to achieve. To stimulate some items for charging Value Added Taxes. pro-poor growth, huge investment is required in 3. Imposition and enhancement of supplementary both urban and rural areas. More so investment in duty on some goods at manufacturing stage and the power sector is the number one priority to increase of the minimum VAT rate on small project any development program of the country business. and strike an economic growth averaging 7-8% per Similarly steps are in process to widen the tax net to annum as contemplated, otherwise, the vision 2021 increase the number of tax payers by another at least will be a far cry. five lacs.The entire Income Tax Ordinance 1984 and VAT Act is under revision containing therein more The country needs domestic investment to more effective measures to strengthen the strategies of than 32% of the GDP as projected in the current resource mobilization. The National Board of fiscal to support the target growth rates. This Revenue (NBR) has chalked out programs to hold projection of the government can be supported with symposiums, seminars and workshops and the mobilization of resources through domestic exchange views on widening the tax net and make revenues, reducing losses and subsidies of the state the people aware and more conscious about the owned enterprises and increasing external fund responsibility to pay taxes. A fund titled Bangladesh inflows such as remittances, aids, borrowings, grants Infrastructure Finance Fund (BIFF) has been created etc. The tax-GDP ratio can be made further healthier and a bond would be issued to raise funds from the by expanding tax bases, minimizing exemptions and individuals and organizations on payment of only exclusions of items which have prospects to 10% taxes within the period of 2012. The Bangladesh Accountant/April-June 2010 1 Editorial It is thrilling to recollect that the size of the first then the growth rate in the GDP is still logged within national budget of the country presented in 1972- the range between 5% to 6% over a period of about 1973 was Taka 786 Crore (7.86 billion) while the 39 years after independence? As a nation size of the national budget for the fiscal 2010-2011 appreciably advanced in intellect we must read our is 1.32 trillion which is 168.155 times bigger faces on the mirror and try to find out the causes of compared to the size of the first budget of the our failings and locate the causes either in country. This indicates the unimaginable support our corruption or in inefficiency or in leadership crisis. people have been providing to our Government to mobilize resources for the development of the The Honourable Finance Minister of course has country. But this is a hard reality that the country has made a brave target to strike a GDP growth rate of not been able to build the required infrastructure for 6.7% and raise investment to up to 32% of the GDP. sustainable economic growth and per capita income Allocations made for investment in power, energy has not increased in the same proportion. and education sector are all encouraging but alarmingly the record of implementation of the The Power sector of the country is still one of the previous Annual Development Programs are not weakest in the world. Bangladesh’s position is below satisfactory. In spite of that, a bigger ADP around the 180 in the World ranking of Per Capita Electricity size of Taka 390 billion has been announced for the Consumption. Even we are not at par with our fiscal 2010-2011 which is an increase of about 35% neighboring countries. In India the per capita over the ADP of the fiscal 2009-2010. electricity consumption is more than 470 Kwh, in Pakistan more than 440 Kwh and in Sri Lanka more The unofficial rate of inflation is believed to be than 350 Kwh whereas in Bangladesh the per capita around a double digit figure although the electricity consumption is slightly more than 145 Government claims the inflationary rate is Kwh. But power and energy Sector plays the most fluctuating between 6% to 7%.With such a huge vital role in developing the economy of a country. expenditure based budget the Government must The development infrastructure of the country is still mobilize resources as projected ,make a sizable lagging far behind in spite of huge increase in the amount of productive investment and allow the size of the national budgets. private sector to play their role to increase production and create job opportunities for the Bangladesh is still an undeveloped/Least Developed unemployed which may be the appropriate answer country as ranked by the World Bank/United to the economic gaps and lapses since the Nations and other organizations. To enable the independence of the country. Government to mobilize resources the people of this small country have been making huge contributions to the national exchequer since liberation in 1971. Starting with a national budget of Taka 7.86 million the country has gained the strength to finance a M Farhad Hussain FCA budgetary projections of Taka 1.32 trillion. But why Chairman, Editorial Board The Bangladesh Accountant/April-June 2010 2 Accountancy Global Branding of Chartered Accountancy Profession in Bangladesh* Dr. Jamaluddin Ahmed FCA Introduction: the Americans with capital to shift to an industrial economy. Accountancy is a critical component of the infrastructure for British auditors accompanied the investors to provide reliable a market economy. Sound economic activities are not financial information, as there was no organized American possible without accountancy. Accountancy provides accounting body. The British auditors started organizing the information on the financial position and profitability of accounting profession and training the Americans. The US operations. It is the foundation of a country’s fiscal system accounting profession gradually grew under the leadership of and it plays a key role in corporate governance.
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