Big businesses thrive on spending recovery
After the pent up consumer demand fuelled spending momentum post shutdown, big market players grabbed the opportunity – thanks to their very good logistics support
A double-digit growth in FY21 revenue collection from big businesses, from cosmetics to telecoms to pharmaceuticals to construction, bears witness to an excellent performance they all have put up dispelling the pandemic blues.
After the pent up consumer demand fuelled spending momentum post shutdown, big market players grabbed the opportunity – thanks to their very good logistics support.
In FY21, the National Board of Revenue (NBR) posted nearly 11% growth in revenue collection from cigarette, telecoms, housing, pharmaceuticals, banks, fast-moving consumer goods, manufacturing, construction and a few other businesses.
Experts have linked such strong revenue collection to uninterrupted operations of big businesses with good logistics support even in the pandemic time and the return of consumers to meet their pent-up needs.
However, Ahsan H Mansur, executive director at the Policy Research Institute, told The Business Standard that the NBR's revenue growth does not reflect the reality on ground, with small businesses still struggling to ride out pandemic-led earning shocks.
When it comes to contributing to the government's exchequer, cigarette companies, who account for 27% revenue on goods and services, again came out the topper with Tk28,706 crore in VAT payments on sales in FY21.
The sector maintained a consistent growth in sales amid Covid-19, with around a 12% rise in businesses year-on-year. Tobacco product sales posted a 10% growth as well, according to the NBR.
Golam Mainuddin, chairman of British American Tobacco Bangladesh, said at the beginning after the pandemic had hit the country, they faced a little bit of disruption in product supplies which, however, did not last long.
"Our tax payment has increased as we continued our business by complying with all necessary guidelines," he said.
A new normal feature – people using virtual meeting apps more than before – boosted Internet data usage offered by telecom operators, as reflected in the NBR's collection.
In the last fiscal year, the revenue board's collection from the country's four telecom operators jumped by 24% year-on-year. The government gets 25% VAT and supplementary duty on mobile recharges.
Cell phone operators, however, say a hike in tax rates has contributed to the government's increased revenue earnings.
Wishing to be anonymous, an official at a telecom operator told TBS that revenue collection from the sector went up in FY21 because of a 5 percentage point rise in supplementary duty in the 2020 budget.
Banking activities continued on a limited scale in the major part of FY21 because of the pandemic, yet the government earnings from the sector increased by more than 30% compared with the preceding year.
The government gets 15% VAT on all types of service charges on bank account opening, loan disbursement, credit and debit cards, export proceeds and import payment. It also charges VAT at source on purchases through the banking system.
The pharmaceutical industry registered a manufacturing boost on the back of high demand for medicines in the pandemic time. In FY21, the NBR witnessed more than 15% year-on-year growth in its VAT collection from the sector.
The country's pharmas registered 18.56% growth in sales in the last fiscal year, according to the IQVIA, a US-based healthcare data science company.
Industry people say intake of vitamin supplements has gone up in this pandemic time, leading to a rise in sales.
SM Shafiuzzaman, secretary general of the Bangladesh Association of Pharmaceutical Industries, said, "People's purchasing power has increased significantly over the last 10 years. They now visit doctors whenever they need treatment. Thus, our sales have increased."
The NBR's revenue collection from the construction sector, which somehow managed to continue its operation even in the lockdown last year, surged by around 14%. Revenue from sales of rods, cement, and ceramics also rose by over 10%.
According to the NBR, its revenue earnings from the steel and rod industry increased by 27% in FY21, while cement and ceramics accounted for 11% and over 36% respectively in their revenue growth from these two sub-sectors.
Edible oil consumption rose by 1% in the last fiscal year, while the use of cosmetics saw an over 31% rise and sales of soaps went up by around 14%.
Small businesses were the losers
Small businesses, restaurants in particular, are still grappling with low sales as reflected in the NBR's decreased revenue collection from them in FY21. The revenue board collects trade, VAT and turnover tax from them.
According to the NBR, their collection from small businesses dropped to Tk2,170 crore in FY21 in contrast to Tk3,919 crore in FY20 and Tk9,413 crore in FY19. The small enterprises also had lost one-fourth of their businesses during the pandemic.
Bangladesh Shop Owners' Association President Md Helal Uddin said, "Small traders, except for sellers of consumer goods, have been hit hardest by the pandemic-led lockdown, leaving them devastated with loan burdens."
Many ventures such as restaurants, printers, stationery sellers and packagers suffered a massive slump in their sales as the NBR's revenue collection from them dropped up to negative 50%.
