The proposed budget for the fiscal 2023-24 has some good news for the local industries, which, faced with various problems such as energy crisis and raw material price hike due to global inflation, have so far been in a dull patch.
The budget, placed in parliament on Thursday, rolls out a plan to continue with the existing tax holidays and rebate facilities for the local industries.
"As a strategy to increase investment, maximum utilisation of production capacity of existing industries through appropriate safeguards and multi-directional expansion of export-oriented industries, and with a view to increase revenue, I propose to reduce/increase customs duties for various sub-sectors," Finance Minister AHM Mustafa Kamal to the parliament while placing the budget.
The government has already imposed some curbs on imports of finished goods so that the local industries can grow unhindered.
Home appliances such as washing machines, microwave oven, juicer and pressure cookers will continue to enjoy rebate facility on raw materials imports until 2025 while those of refrigerator, freezer, soap and shampoo will have reduced value added tax (VAT) of 5% until 2024.
To protect local lift and escalator manufacturers, the government will continue the duty waiver on imports of raw materials while finished goods will see customs duty increase up to 15% from the existing 5% for lift and 1% for escalator.
VAT waiver on diaper and sanitary napkins will continue until 2024, as per the proposed budget.
Locally manufactured computers will enjoy duty rebates on imports of raw materials until 2026.
To discourage imports and help the local manufacturers, bicycle parts will see a rise in customs duty to 15% from the existing 10%.
Customs duty on imported adhesive paper or cloth will go up to 15% from the existing 10% while 15% regulatory duty has been imposed on adhesive glue.
Considering the industry situation, the new budget has proposed to reduce advance income tax (AIT) to 2% from the current rate of 3% on manganese imports.
At the same time, VAT on the import of terephthalic acid, ethylene glycol, and hot rolled stainless steel sheet in coil has been proposed to be slashed to 5% from 15%.
While talking to The Business Standard, Shahriar Jahan Rahat, deputy managing director of the KSRM Group, said that the reduction of import-stage VAT on HR coil and related chemicals will have little impact on the price of corrugated galvanised iron (tin) as output VAT remains the same.
Some working capital may increase in the HR coil industry as import-stage advance VAT has been proposed for reduction.
Only a 3.1% AIT reduction on manganese will have hardly any impact on cost as the final tax of 27.5% on steel bars remains unchanged. The AIT reduction on manganese is negligible because only 0.18% manganese is used per tonne in steel bar production, he added.
The government has proposed to increase import duty on processed cashew nuts from 15.25% to 43% to protect the local industry.
The proposed budget has increased customs duty on the import of biaxially oriented polypropylene (BOPP) films from the current 10% to 15% to provide protection to the local industry.
Sandwich panel and electric panel will see customs duty hike to 5% and 10% from the existing 1% respectively.
A 25% customs duty has been proposed on software imports.
Imported tiles will no longer enjoy duty rebate while locally produced handmade biscuits will enjoy VAT waiver up to Tk200 per kg while handmade cake will have a VAT waiver up to Tk300 per kg.
Sweetmeats will see their VAT go down to 7.5% from the existing 15%.
One hundred more raw materials of cancer medicines, Silicon tube – the main raw materials for the production of IV Cannula, and diabetic management related drugs will now enjoy zero duties.
Monjurul Alam, director of Global Business Development at Beacon Pharmaceuticals, told the Business Standard, this decision of the government will greatly help cancer and diabetes patients.
"In our country, we don't increase the price of medicines much. For a long time, we have been trying to keep the price affordable. But due to the dollar price hike, the price of raw materials has increased. A reduction in import duty will help us not to raise the prices of these drugs, or keep them the same," he said.