- Paper cup manufacturers in Bangladesh pay a 61% duty on import of raw materials
- Their peers in Europe, America, Canada, and India enjoy a duty-free facility
- The import duty is 7.5% in Nepal, 5% in Myanmar, and a maximum of 5% in the Middle Eastern countries
Although the demand for paper cups has increased in the country, local entrepreneurs are not able to capture the market. They say the industry is not developing due to high tariffs on the import of raw materials.
According to the Paper Cup Manufacturer Association Bangladesh (PCMAB), paper cup manufacturers in Bangladesh have to pay a 61% duty on the import of raw materials while their peers in Europe, America, Canada, and India enjoy a duty free facility.
The import duty is 7.5% in Nepal, 5%in Myanmar, and a maximum of 5% in the Middle Eastern countries.
Local paper cup manufacturers are lagging behind their peers in other countries owing to high raw material import tariffs that lead to a high production cost.
PCMAB recently applied to the National Board of Revenue (NBR) seeking a duty free raw material import facility.
According to PCMAB data, the size of the international market for paper cups is $316 billion and the in-country demand is 20 crore cups a month. If the average price of a cup is Tk1, the demand in the country is equal to Tk240 crore per year.
Kazi Sajedur Rahman, president of PCMAB and proprietor of paper cup manufacturer KPC, told The Business Standard that the current import duty per kg of readymade paper cups and plates is $1.50.
"We have appealed to the NBR to set the tariff at $3.5 to encourage domestic manufacturers," he added.
Kazi Sajedur Rahman said manufacturers in India can produce paper cups at a much lower cost as there is no duty on raw material imports.
" If we are not provided with a duty-free raw material import facility, this industry will collapse," he added.
A visit to the KPC factory in Purbachal in early March showed that more than half the machines were shut down with cups being made on only six of the 15 machines. The daily production capacity of the factory is 8 lakh cups but now only 3 to 4 lakh cups are produced, and hardly 30 workers, employees, and officers work at the factory.
The demand for paper cups for tea and coffee has increased in the Covid-19 pandemic. From coffee shops to restaurants, even tea shops, the use of paper cups has increased everywhere. At present, more than 20 crore paper cups are being sold in the country every month. Of this, 5 crore cups are supplied by domestic companies and the rest 15 crore are mostly imported from India, said the president of PCMAB.
The price of locally produced paper cups
Local companies produce paper cups weighing from 80ml to 360ml which cost between Tk0.8 and Tk2.5. The price is Tk0.8 for an 80ml cup, Tk0.9 for a 100ml cup, and Tk0.95 for a 120ml cup. A plate made of paper is priced from Tk3-5 for plates that are seven, eight, nine, or 10 inches in diameter.
How paper cups are made
The imported paper is first printed on a machine with the logo of the specific organisation as per the design and requirement. It is then cut to size in another machine. The cut papers are then heated to the shape of a cup using another machine.
The price of paper has gone up
The PCMAB president said, at present, paper imports for making cups have stopped. He added that before the coronavirus pandemic, the price of a ton of paper was $1,100 to $1,200, but the price of that paper has gone up to $1,700.
Paper cups are a kind of paper container, which is environmentally friendly and if this pot is discarded after use, it can decompose in soil to make organic manure.
Kazi Sajedur Rahman said the paper cup industry has potential.
"If the government pays a little attention to this sector, we will be able to capture the international market and meet local demand," he added.
To meet current demand, around 100 companies can easily run at full capacity.
Kazi Sajedur said, "If the government helps in the marketing of paper cups and paper plates, we will be able to contribute to the economy of the country by enriching the market with these new potential products."
Located in Baunia of Dhaka, TSS Empire is a professional paper products manufacturer and is one of five top manufacturers in this country.
Rashed, the proprietor of TSS Empire, said his company has three machines that can make 110,000 cups a day. But his company has been closed for the last 20 days as it could not survive in these adverse conditions in a competitive market.
"We have no choice but to close our business," Rashed said. "On the one hand, the price of raw materials has gone up and on the other hand, low quality cups are being imported. Now in order to sustain our business, we need zero duty on the import of raw materials. At the same time, the import duty on finished cups from abroad will have to be increased."
He said more than 100 entrepreneurs have come up in this sector. They bought a machine and started production, but they cannot survive now. Now they can neither sell machines, nor produce and sell products.