The WB also suggested continuation of pre-shipment inspection (PSI) system until the National Board of Revenue database was strengthened in the report sent to the government earlier this month.

A five-member WB operation advisory team under David Hughart held a series of talks with the NBR last week before sitting with Finance Minister M Saifur Rahman yesterday to discuss the report, Bangladesh Modernisation of Revenue Administration: Key Elements of Modernisation Strategy and Options for World Bank Support.

The report said because of a freeze on recruitment, the NBR was forced to promote unqualified staff.

"The recruitment freeze needs to be lifted so that the NBR can fill critical professional positions with properly qualified staff and prepare itself for the retirement of more senior officers and inspectors."

"There is no legal provision to directly hire skilled manpower from the private sector, but we can hire external experts, say, for two years to train our officials," the finance minister told the WB team.

Currently 3,000 approved positions stand vacant in the NBR because of the stop in appointments.

The report noted that most of the current NBR staffers had no education in relevant tax administration functions.

It backed an NBR request to modify the selection criteria of the Public Service Commission, the body responsible for recruitment, for selection of more commerce and accounting graduates.

The report detected serious flaws in performance appraisal of staff and termed current remuneration as 'below the living wage', observing that the reward for hard-working and honest professionals was inadequate.

As options to address the problems, the report recommended three steps: the development of a special reward scheme for detection of individual evasion cases, a supplementary reward scheme based on performance and greater autonomy to the NBR in implementation of policies and remuneration in the wake of the reward.

Quoting Bangladesh investment climate survey's identification of the NBR as the highest informal payment receiving government organisation, the report added more strategies to fight corruption there.

Additional strategies include a precise legal framework, transparent procedures and mandatory declarations of wealth by tax officials and their immediate families.

"We want to give a corporate structure to the NBR," Saifur said, pointing out a lack of coordination among the revenue realisation departments -- the customs, Vat and income tax."

The WB report also asked for the continuation of the PSI system since new PSI agents needed to provide the NBR with detailed computerised information on values and classifications that are yet to be realised.

On the PSI, the finance minister said the decision on the PSI system would be taken after evaluating the capacity of the NBR in three months.

The NBR is now implementing an information system development project to acquire the capacity.