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Plastic products makers want zero duty on capital machinery import

Pplasticlastic goods makers have sought zero duty on import of capital machineries, reduced duty on imported raw materials and higher duty on imported plastic items to help flourish the sector and make goods competitive in the global market.

“Plastic industry is growing fast as its export growth averaged at 20% year-on-year. It earns about Tk3,000 crore in foreign exchanges annually to contribute to the economy,??? said Md Jashim Uddin, president of Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA).

The plastic sector has around 5,000 manufacturing units, employing more than 20 lakh people directly and indirectly.

But the industry is passing hard time due to suspension of the GSP facility in the US market and faced financial losses of around Tk4,000 crore due to the shutdowns and blockades across the country ahead of the national election held on January 5, he said.

To overcome the situation, he said, the government should withdraw import duties on all capital machineries to make the sector competitive in the global market as the existing 2% import duty has pushed it to tough competition because of rising prices of products, according to the BPGMEA.

He also sought some incentives, including LC opening at zero margin for two years, reducing interest rate on bank loans, 20% cash incentive and reducing tax at source to 0.3% from 0.8%.

Plastic goods makers proposed to impose duty on mould in line with the invoice value or declaration value instead of fixed pricing system because of diverse quality of mould.

“It is necessary to lift tax and VAT on gas generator and its parts because frequent load shedding disrupts production,??? said BPGMEA president. At the current budget, plastic goods producers have to pay 2% duty on generator import.

Cutting import duty on urea resins, a raw material, to 10% from existing 25% is necessary as only two or one local urea resin producing industry fail to meet local demand, said Jashim Uddin.

To encourage the local industry, BPGMEA proposed to increase import duty on imported plastic products like boxes, cases, bags, trays for transportation and keeping of chicks and eggs, nursery trays for seedlings, tableware, kitchen ware and so on, as these items from India and China flood the domestic market.

It proposed to cut import duty on all basic raw materials, including pigment, polypropylene, high impact polystyrene, granular form, melamine and others.

To consider in the upcoming budget for 2014-15, the BPGMEA made a number of proposals, including bringing plastic industry under tax holiday for 10 years to help double the production and generate employment as well, reducing corporate tax for expediting local and foreign direct investment, lifting VAT on locally made toys.

Local products burdened with higher tariff failed to sustain due to imported products entering into the country through anti-dumping, it said. Inter bond-transfer facilities and setting up of a planned plastic industrial estate is important to increase export.

At present, the country is producing plastic goods worth Tk18,000 crore annually and earns almost Tk2,000 crore as revenue from this industry, according to the BPGMEA. During 2012-13 fiscal year, the country exported plastic goods worth $84.51 million, up from $68.76 million a year ago.

The country mainly exported plastic goods to the US market and around 80% of Bangladesh’s total plastic goods export goes to the EU market.

Bangladesh can become a global player in plastic industry by raising its turnover to $2 billion by 2015 and $4 billion by 2020, said a UN report published earlier.

But for that, the country has to address three issues immediately, according to a case study of Bangladesh’s plastic sector conducted by the Economic and Social Commission for Asia and the Pacific (ESCAP) of the United Nations.

The issues are infrastructural support; waste management and recycling facility; and skills development. Plastic-based products currently represent a sizeable sub-sector in the chemical industry of Bangladesh.

Report: Kayes Sohel
Source: Dhaka Tribune

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