Since the country's economic progress is based on the development of the SMEs, such a division, headed at least by a state minister, will prepare SME policies and take necessary measures for implementation, suggested Dhaka Chamber of Commerce and Industry (DCCI) in its budget proposal for the year 2005-06.

The state-run Bangladesh Small and Cottage Industries Corporation (BSCIC) has become inactive for which the private sector including the SMEs are not getting sufficient assistance, the proposal added.

The government should also subsidise the SMEs as there is a shortage of management and technical skills, it said.

The DCCI presented the proposal at a press conference in Dhaka. It hoped the government will seriously consider its proposal.

The DCCI came up with 113 recommendations of which 47 suggestions are related to tax and supplementary tax, 23 to income tax, 24 to value added tax and 19 to others. The budget proposal has already been sent to the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).

The chamber recommended for re-introduction of an earlier self-assessment system in terms of income tax payment.

DCCI also stressed the necessity of introducing an online tax system for payment of tax and submission of income tax return in order to stop harassment of tax payers.

Tax free limit of individual tax payers should be increased from Tk100,000 to Tk150,000 and of old citizens (above 60 years) the ceiling should be Tk300,000, the chamber observed.

In order to encourage women in developing entrepreneurship, income tax payment relief for women entrepreneurs should be raised up to Tk200,000, the proposal said.

The budget proposal recommended 5 percent tax on the essential raw materials, 10 percent on spares and machinery of industries, and 25 percent tax on other goods.

Pre-shipment inspection organisations should be made accountable for their work as they receive service charge at the rate of 1 percent for work, it said.

In the proposals relating to Vat, the chamber observed that Vat collection is not justified under the clause of 2 (ma) (e) and 5 (2) of Vat law because a commission for commission agent is included in the price of the products at which price a dealer purchases products from the producer. "So, this act should be amended," the DCCI said.

The DCCI also suggested separate categories of Vat imposition for the small and marginal level businessmen of Dhaka, Chittagong, Rajshahi, Khulna, Barisal, Sylhet and other districts.

According to the proposal, Vat in Dhaka and Chittagong city corporation area should be fixed at Tk4200. For Rajshahi, Khulna Barisal and Sylhet city corporation areas and other district towns, it should be fixed at Tk3200 and for areas outside the district towns at Tk2000.

Speaking at the function, the DCCI Chief Sayeeful Islam said the country's exports of woven clothes to the US market dropped by 21 percent while the Chinese exports increased by 65 percent in the first month after the withdrawal of quota system.

"It is a matter of concern for us. So the government and the private sector have to be more active to cope with the new situation," he said adding that it is important in this situation to protect the existing industries, strengthen their base and diversify the manufacturing sector.

"A public-private partnership can help us face the challenges in the quota-free era," he felt.

He also observed that there is a need of coordination among industrial, trade and financial policies for a better industrial growth.