Cost of export-oriented factories to go down

Setting up export-oriented factories will be cheaper as the government has offered import duty benefits for inputs of pre-fabricated buildings and fire equipment.

Earlier, only export-oriented garment factories received the benefits. The budget announced in parliament yesterday also proposed to allow capital goods benefit to imported cutting tables to be used by export-oriented garment factories.

But the cost will be higher if an entrepreneur sets up industries with imported boulder, crushed stone, ferroalloy, billet, bars, rods and angles because duties and taxes have been enhanced on these products.

Supplementary duty or SD for boulder stones has been increased to 10 percent from zero duty now and the duty for crushed stones was raised to 30 percent from 20 percent.

For the textile sector, the government reduced duty to 15 percent from the existing 25 percent for stripping chemical and to 5 percent for flax fiber and spandex/elastraometrics from 10 percent.

The government has also proposed a number of duty measures, both SD and customs duty or CD, to protect and expand local industries.

Prices of toiletries, paper, ceramics, milk products, tyre, tube, fly ash, fibre-glass, LED lamp, laboratory refrigerator, coffee mate, parts of compressor, assembled motorcycle, LPG cylinder, locally-made SIM and smart cards, biogas digester, grease and lubricants will be cheaper thanks to duty cuts.

On the contrary, prices will go up for products: imported rice, talc power, ECG and ultra-sonogram paper, imported billet, imported cigarettes, maize flour, potato starch, textbook for primary and secondary education, machinery for making tobacco, transformer, UPS/IPS and air cooler.

The existing duty exemptions or concessions accorded to the essential commodities including edible oil, sugar, pulse, onion and garlic will continue in the next fiscal year.

For the protection of the chemical sector, reduction of duties and taxes on some inputs used by the toiletries, paper, ceramics and rubber industries has been proposed in the budget. So, the final products will be cheaper.

The CD on petroleum jelly, glossy starch, gum rosin and paraffin wax has been increased to 15 percent from 25 percent now.

Duty for washing machines not exceeding 12kg has been proposed at 25 percent, up from mere 1 percent.

Supplementary duty at the rate of 20 percent on stabilizer for milk, used for the preparation of milk products, is proposed to be reduced to 10 percent. So, milk products will cost less in the upcoming fiscal year.

Customs duty on imported rice has been increased to 25 percent from 10 percent. To protect and promote local production, duties on imported rapeseed cake/soya cake applicable at 5 percent is proposed to be increased to 10 percent.

Prices of locally-assembled motorcycles will go down as SD has been reduced to 20 percent from 45 percent.

For the same reasons, duty at concessionary rates on human haulers depending on different production stages has been proposed. Moreover, CC-based concessions of hybrid cars are proposed because of its importance as a fuel efficient and environment friendly vehicle.

The proposed budget incorporated a new slab of 15 percent CD and now, the slabs would be 0, 1, 5, 10, 15 and 25.

In his budget speech, Finance Minister AMA Muhith admitted that the biggest challenge with the customs administration and management lies with misdeclaration of value or underinvoicing of imported goods, which he said hurts local industries.

“In order to prevent it, we are taking various initiatives such as tariff rationalisation, digitalisation and so on. Besides these steps, I am proposing to fix minimum value of importable essential, consumable and commercial goods in order to verify the basis of declared value.”

“Moreover, I am proposing to fix tariff value on a few items such as tea, tyre of bus and truck and also to continue the existing tariff value with necessary modifications,” Muhith said.