Light engineering industry seeks waiver of AIT on raw material imports
Local light engineering product manufacturers have sought withdrawal of the 5 per cent advance income tax (AIT) on the import of basic raw materials as the sector has been struggling to survive amid the coronavirus outbreak.
The AIT has been adjustable for the light engineering sector, which was made non-adjustable in this fiscal year's budget, said Md Abdur Razzaque, president of the Bangladesh Engineering Industry Owners Association (BEIOA).
"We are not in a position to pay tax now due to the stalemate created by the pandemic."
Light engineering is the engine of the heavy industry and it generated about eight lakh skilled and semi-skilled jobs across the country, he said.
The country has about 50,000 light engineering product manufacturers, who cater to sectors such as agriculture, automobile, pharmaceuticals, food industries and shipbuilding.
"We are small enterprises. We import basic raw materials in small amounts for our factories. But the government put us in the same bracket as the likes of other big industrial sectors."
The sector manufactures all the necessary light engineering products the heavy industries need and help the latter cut import dependence and costs.
Most of the manufacturers in rural areas take high-interest micro credits from non-governmental organisations or local money lenders to manufacturers their items.
But now, repaying the loans has become a mammoth task for them as the production and sales of their products came to a halt since the coronavirus outbreak, Razzaque said.
Even, Prime Minister Sheikh Hasina in January announced the "Light Engineering Goods" as the "Product of the Year" for 2020 intending to encourage product-based export and sought more investment for the sector.
"That is why we urged the government to withdraw the AIT to save the sector. If the government does not consider our demand, the entrepreneurs will fall into severe capital crisis and will be compelled to close their factories."
The association made the demand in their budget proposals already sent to the National Board of Revenue.
The trade body also alleged that local income tax officials harass their entrepreneurs during the payment of value-added taxes after the sales of each light engineering product.
They also shed light on the fact that they enjoy limited access to bank loans.
Abul Kashem Titu, the owner of Mafia Engineering located in the old part of the capital, said he had to count huge financial losses due to the pandemic, as he could not manufacture any item in the last three months.
About 6,000 engineering workshops situated in different parts of Dhaka city are also facing the same problem, he said.
"So, the government should waive the 5 per cent AIT for us to recover the losses. If the workers and mechanics do not survive, how can we run our factories or workshops?"
More than 2,000 engineering workshops in Jashore had faced losses due to the prolonged shutdown of the factories, said Md Asraful Islam Babu, who owns Repon Engineering and Repon Metal in the district.
Upwards of 30,000 technicians who work in different workshops in Jashore now fear losing their jobs, as there was no work since coronavirus took over the national discourse, he said.
"Moreover, most of the entrepreneurs in the district are not capable of making imports directly as the amount of their investment is very low. They have to collect products from the importers."
Such small businesses should be exempted from the minimum AIT, so that they do not feel any pressure to go for making additional investments, he said.
Babu has been exporting water pumps, brick and stone crunching machine to India for the last five years and every month he used to receive orders from importers.
"Now there is no local and export order in my hand. Even domestic demand for my products has declined by almost 95 per cent."
Babu has about 200 technicians and he thinks he may have to go for lay-offs due to falling work orders and income.
There are more than 200 light engineering product manufacturers in Nilphamari, who are now fighting for their survival also, said Ershad Hossen Pappu, president of the BEIOA for the district.
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