Bicycle exporters seek ‘meaningful’ incentives

The 4% cash incentive announced earlier this fiscal year for bicycle exports is meaningless, exporters have said.

Their remark comes as the cash incentive excludes the companies availing bonded warehousing facility, unlike that availed by the bonded apparel and leather products exporters.

Bonded warehousing is the facility to exporters in importing duty-free raw materials for export competitiveness.

The Bangladesh Bicycle and Parts Manufacturers and Exporters Association, in its letter to the finance secretary has already called for making the cash incentive available for bonded bicycle exporters and make it 7% for the sake of export diversification and retaining the momentum in exports.

Bicycle exporters also demanded a corporate tax cut to 12%, in line with that for apparel and leather product exporters, from the existing rate of 15%.

Not all the members of the bicycle manufacturers association are enjoying bonded warehousing facilities.

Some 9 of 15 association members have bonded warehouses, said the association's Secretary General Md Luthful Bari.

"Neither the bonded exporters nor the non-bonded ones find the incentive meaningful," he said.

The 4% cash incentive, apparently applicable to the non-bonded exporters, would not help them at all as they are paying manifold higher duties on raw material and parts imports, he added.

For example, the duties range from 10% to 45% for bicycle frame, fork, brake, seat post, paddle, chain, wheel hubs, and paint imports.

Motorcycle industry, on the other hand, is paying 1%-10% duties against the imports of their key raw materials and parts including engine, transmission and gear parts, and raw material for frame building, while the industry is given 10% cash incentives on exports.

Furniture industry, against their 5%-25% duties against raw materials, are availing 15% cash incentive.

Plastic product exporters pay 5% duties and avail 10% cash incentive, leather products exporters pay 5%-10% duties and get 15% cash incentive, while ceramic product exporters pay 1%-5% duties on raw material imports and get 10% cash incentive.

Cash incentive would help non-bonded bicycle exporters contribute to export if they avail 15% cash incentive as an alternative to bonded-warehousing facility.

"The cash incentive, in fact, has slashed the incentive to non-bonded bicycle exporters," Bari told The Business Standard.   

Bicycle parts manufacturers and exporters belong to the light engineering industry and they were availing 10% cash incentives that later was raised to 15%.

The incentive helped increase bicycle parts exports from the country.

But, the particular 4% cash incentive for the bicycle industry came up as contradictory one and of course not a winning offer to the parts exporters.

The association requested the government to keep treating the bicycle parts exporters light engineering product exporters and let them avail their previous 15% cash incentive. Otherwise, bicycle parts exports would drop drastically, feared the association.

Bangladeshi bicycle manufacturers emerged as a major source of the European bicycle market, while they are exploring big opportunities in the American and African markets.

Meghna Group, Alita Bangladesh, RFL are among the leaders in bicycle exports from Bangladesh.

Despite the much less incentive, in comparison with the other major export sectors, Bangladeshi bicycle exporters continue thriving.

In the first eight months of the fiscal year (July-February), bicycle exports grew 21.29% year on year to $10.26 million, slightly less than the Export Promotion Bureau's strategic target for the period.

The bicycle exporters could have beaten the target, if equally treated with the other thriving export sectors, in terms of incentives for export competitiveness, Bari said.