Extend previous 0% import duty facility for economic zones for 5-10 more years: FBCCI

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has sought withdrawal of the 1% import duty in economic zones for FY25 and proposed extending the previous facilities of 0% import duty for at least five to ten more years.

In the national budget placed on 6 June, the government's proposed 1% import duty on capital machinery for all industries in economic zones and high-tech parks for FY 2024-25.

1% import duty threatens foreign investment in economic zones: Stakeholders

At a briefing today (8 June) at the FBCCI office in Motijheel, the trade body's President Mahbubul Alam said, "If the [previous] facilities are not available, it will discourage foreign investment in these special regions and [perhaps] send the wrong message to foreign investors."

Earlier, the Bangladesh Economic Zones Authority (Beza) announced its intention to appeal to the government for the withdrawal of the duty. 

Among the voices expressing concern, Suman Bhowmik, general manager (accounts) of Meghna Group of Industries, highlighted the potential negative impact on foreign investment.

Economic zone stats and government plans

According to Beza sources, there are currently 97 approved economic zones in the country, with 68 government-owned and 29 private. Out of these, 11 are operational, with 3 government-owned and 8 private.

There are also 29 new economic zones under development, split between 15 government and 14 private zones.

These zones currently house 50 operational industrial establishments, with a breakdown of 13 in government zones and 37 in private zones. An additional 53 establishments are under construction, with 36 in government zones and 17 in private zones.

Economic zones employ roughly 60,000 people, with the private sector accounting for 53,000 jobs.

Beza's long-term goal is to establish 100 economic zones nationwide by 2041. This initiative aims to generate employment for one million people and produce and export $40 billion worth of goods annually.

The recently presented national budget for fiscal year 2024-25 included a few proposals impacting economic zones. Finance Minister Abul Hassan Mahmood Ali announced a new 1% duty on used construction materials imported by developers for economic zone development.

"While a 0% import duty was previously offered on goods used in economic zone development, I propose this be changed to 1%."

The Minister also proposed changes to the import duty on vehicles used by businesses within economic zones.

"Previously, a 0% import duty existed for vehicles used by establishments in economic zones. I propose maintaining the import duty exemption but adding all other applicable taxes and duties."

The budget speech also outlined the government's plans to develop new economic zones. Development work is expected to begin soon in Gopalganj, Kushtia, Satkhira, Chandpur, and Pabna.

The Finance Minister reported that over 200 companies have been allocated land within the country's 29 economic zones. These companies have proposed investments totalling approximately $23 billion.

Of this proposed investment, $5.5 billion has already been invested in private economic zones, where 43 establishments are currently operational and another 70 are under construction.