"Without having adequate backward linkage industries, RMG export would be seriously affected after 2004…and it will not be possible to avert a slump in export earning," the chamber said in its budget proposal for 2004-2005 fiscal.

In the proposal the DCCI called for reforming the duty structure and maintaining a stable policy, saying if there are frequent changes in tax policy, it leads to economic mismanagement and creates sufferings to businesspeople.

As South Asian Free Trade Area (Safta) is going to be implemented in 2006 and free trade deals are being negotiated with a number of countries, DCCI suggested diversifying the export basket and making industrial base stronger.

For this, the chamber said, the four-tier duty structure should be changed starting with the lowest 2.5 percent duty for basic raw materials, capital machinery, pharmaceutical products and some essential goods.

Duty for intermediate goods and raw materials that are not produced locally should be 15 percent, duty for those produced locally should be 20 percent and for imported luxurious goods 30 percent, the DCCI recommended.

It also proposed raising the individual income tax exemption limit to Tk 125,000 from existing Tk 90,000 in view of the inflationary trend.

The DCCI said developing infrastructure including gas, water and the electricity should be given priority by undertaking pragmatic plans with adequate funds.

About value added tax (Vat), the chamber said Vat should be realised on the basis of actual sales value recovered from customers in line with universal practice.

Terming the country's existing pre-shipment inspection (PSI) system 'distorted', the DCCI said it should be replaced by an appropriate and optional PSI regime, putting an end to the monopoly of a single agency for one particular area.

It would expedite the transition of customs into an efficient and credible administration and trade facilitation agency, it observed.

The DCCI said audit firms should be appointed to monitor the activities of PSI companies, which must have insurance coverage to compensate the importers for their losses.

"Import duty on sugar should be reduced to 15 percent from present 30 percent," the chamber recommended saying steps should be taken to improve the present situation in sugar production by privatising the mills partially (at least 51 percent) and giving subsidy in sugarcane production.