Govt aims to attract local entrepreneurs in container business

The government has proposed to reduce the total tax incidence on all types of containers to create opportunities for local entrepreneurs aiming to save billions of dollars each year. 

During the budget speech, Finance Minister AHM Mustafa Kamal said, "In order to create domestic entrepreneurs in this sector, I propose to reduce the total tax incidence on all types of containers where customs duty rate will be 15% on both types of containers and total tax liability will be 20% in both cases."

Even though Bangladesh-flagged ships are sailing in international waters, the container business is controlled by 100% foreign companies, according to the National Revenue Board (NBR) sources.

Every year about 30-35 lakh containers are used to transport import-export goods, they said. Traders rent these containers from $100 to $150 according to their destination. 

But due to high duty, the import of containers is almost zero, they said.

An official of NBR said, a local entrepreneur recently sent a letter to the revenue board to draw attention to the issue, and to consider duty-free facilities on container imports. 

The official hoped that this policy will be helpful to bring investment in the container business. 

Talking to several businessmen involved in the shipping business, it has been learned that there are domestic garment firms who cannot clear the goods from the port on time. 

As a result, an additional amount has to be paid for demurrage charges. All of which have to be paid in dollars. 

If the traders have extra containers or can bring these products in a container rented from a domestic company, then these extra fees do not have to be paid. 

In view of these, duty exemption on container import will save the country's dollars, they said.

Ocean-going vessel showing path

Thanks to government policy support, tax exemption on foreign currency income from the outgoing fiscal year of 2022-23, local entrepreneurs, invested to expand their capacity in the oceangoing shipping sector, now have a carrying capacity of nearly 31 lakh tonnes with a total number of flagged vessels 95, said Industry insiders. 

Leading industrial conglomerate Meghna Group of Industries (MGI) added four brand new bulk carriers to its fleet of oceangoing vessels in February this year. 

With the 22 vessels, the total cargo carrying capacity of MGI reached 12.20 lakh tonnes enabling MGI to secure the top position in operating oceangoing vessels in the country exceeding the long-time topper KSRM Group.

KSRM now has a total of 23 oceangoing vessels in its fleet but their total cargo-carrying capacity is 11.77 lakh tonnes.

In FY23, the government offered tax exemption on foreign currency income by Bangladeshi flagged oceangoing ships from the upcoming fiscal year in a bid to earn $3 billion to $4 billion a year. Earlier such ships had to pay a 10% tax on their incomes.

According to NBR, this tax break facility will continue till 2030 if the vessels' foreign exchange income is brought into the country through banking channels.