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Wednesday, October 05, 2005

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HEADLINE
 
Tata investment proposal runs into rough weather
Shakhawat Hossain
10/5/2005
 

          The National Board of Revenue (NBR) Tuesday turned down Tata Group's demands that were not in conformity with the country's existing rules and regulations.
"We could not agree with the demands made by the Tata Group for fiscal incentives as those do not conform to the country's existing policies," said high official of the board.
The board has, however, advised the Indian conglomerate to place its demands along the line of country's existing rules and regulations during a meeting at its central office.
In the meantime, finance and planning minister M Saifur Rahman asked the Tata Group not to place unusual demands as pre-conditions to making their proposed US$ 2.5 billion investment.
The Tata Group is now in the third round of negotiations with the secretary level committee on its proposed investment on steel, power and fertiliser plants.
Other than fiscal incentives, the talks will focus on crucial issues like gas pricing and quantity of gas needed by the group.
"I have suggested them not to place unrealistic demands like tax and VAT exemptions," Saifur told reporters after a meeting with the visiting Tata team leader Alan Rosling.
Saifur said it would not be possible for the country to offer the group such fiscal incentives that are outside the existing policies.
He, however, said group like Tata with huge global reputation would try to get facilities as much as they can.
"We have no problem to award them with the incentives that exist under the country's policies," said an official of the NBR.
But there are some demands of the Group which simply do not match the incentives offered to other investors, he added.
When contacted a Tata Group official refused to comment on the meeting between the NBR and the group. He said there is no more scheduled meeting on fiscal incentive this round.
The Tata expert on fiscal incentive Arun Ghandi has already left the capital, he added.
In fact, the demands placed by the Tata Group at Monday's meeting with the NBR can only be met through the changes to existing rules, sources said.
The Tata Group has placed demands including 100 per cent income-tax exemption for its power, fertiliser, steel and coalmine projects for a period of more than 10 years from the date of commercial production.
The existing regulations allow waiver on import duties only for 100 per cent export-oriented industries and capital machinery for power generation projects that have power purchase agreements with the government.
It sought duty waivers on imported raw materials and capital machinery for the projects. Besides, demands for not introducing new tax, levies and charges during the period of operation and for guaranteeing external insurance coverage were also made by the Group.
The Tata Group demanded the exemption from stamp duties and registration charges in respect of land purchase and mortgages that will be required for the projects. The existing regulations do not provide for such exemptions.
Meanwhile, agencies reports adds: Finance and Planning Minister M Saifur Rahman said the government would not provide any incentive to the Indian corporate giant -- Tata -- that could force other investors, including local ones, into uneven competition, report agencies.
"We'll not give them facilities that would be arbitrary," he told reporters at his office after a meeting with the visiting Tata executives now examining feasibility of their proposed investment of US$2.5 billion in electricity generation, fertiliser and steel manufacturing.
He said they were in Bangladesh to review the tax and investment regime of Bangladesh as well as the forex-repatriation rules before opening their business.
The minister apprised the Tata team that the government would not be able to offer them something that would create an uneven playing field for the other investors. He also requested them not to seek such unusual incentives.
He, however, told the reporters that big investors like Tata deserve some sort of extra facilities more than the ones enjoyed by small investors who are coming up with meagre investment like one million dollars.
Revenue target achievable
Another report says: Saifur Rahman Tuesday expressed the hope that the revenue target for current financial year could be achieved despite adverse effect of international developments on the country's economy.
Talking to journalists after a meeting with the senior NBR officials in the conference room of the ministry of finance in the city, he said the growth of revenue collection during the first quarter of the current fiscal crossed the target fixed in the national budget.
He said the oil price hike in the international market created heavy trade imbalances among various countries. Besides, he said, the price hike of various goods in global market has created adverse impact on revenue collection. "It has also created huge pressure on liquidity," he added.
"We have to increase our revenue collection to face the challenges to the economy by improving the performance of the NBR," the finance minister said. The NBR's performance during the last three months is good and it will have to do better in the coming months, he added.

 

 
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