Leather, synthetic footwear exporters seek 10-year tax holiday for backward linkage

Businesses propose flat 1% import duty on all types of raw materials for manufacturing export goods
They call for halving export tax and withdrawing taxes on cash incentives
Footwear backward linkage raw materials are mostly imported from China and neighbouring countries
It creates pressure on the country's foreign exchange reserves

Businesses seek a 10-year tax holiday to encourage the setting up of backward linkage industries that would supply raw materials and components for manufacturing various types of footwear, including those made of leather, synthetics and fabric, in the country.

"If backward linkages such as shoe soles, lasts, moulds, adhesives, shoe forms and materials used in making frames are facilitated, leather products such as footwear, as well as synthetic and fabric footwear, will become more competitive in the global value chain by reducing export lead time," according to a proposal by the Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh.

The written proposal, signed by the association's President Syed Nasim Manzur, was presented by its Vice President Mohammad Nazmul Hassan Sohail during a pre-budget discussion organised by the National Board of Revenue (NBR) at its headquarters in the capital on Monday. The meeting was presided over by NBR Chairman Abu Hena Md Rahmatul Muneem.

According to the association, these backward linkage raw materials are currently mostly imported from China and neighbouring countries, creating pressure on the country's foreign exchange reserves.

"Backward and forward linkage industries are essential for sustainable development, including that of leather and synthetic footwear," it stated.

Additionally, instead of a bonded warehouse facility, the association proposed a flat 1% import duty on all types of raw materials for manufacturing export goods, halving the export tax, and withdrawing taxes on cash incentives.

It also proposed providing a common bonded facility similar to a central bonded warehouse for the benefit of relatively smaller exporters.

At the meeting, the Bangladesh Ceramic Manufacturers and Exporters Association proposed a reduction of duty-tax on various chemicals used in the manufacture of ceramic products and increasing duty on the import of ceramic products.

Representatives of the Bangladesh Tanners Association presented their proposals as well at the meeting.

Barvida wants imported vehicle value depreciation to increase by 15%

At the same meeting, the Bangladesh Reconditioned Vehicles Importers and Dealers Association (Barvida) proposed increasing depreciation on imported vehicles by 15%, which is currently up to 35%, to offset local currency depreciation to some extent against the US dollar.

Depreciation on imported vehicles is currently provided at a rate of 10% for vehicles manufactured up to two years ago, 20% for those manufactured up to three years ago, 30% for up to four years, and 35% for vehicles between four and five years old. Barvida proposes increasing this to 50% by the fifth year.

The higher the depreciation, the lower the import price of vehicles.

Barvida President Md Habib Ullah Dawn said, "Due to the massive devaluation of the Bangladeshi currency against the US dollar, the price of vehicle imports has increased. For this reason, if the depreciation is increased by 15%, it will create an opportunity for consumers to get it at a lower price."

He said, "The car that we used to sell for Tk18.5 lakh now costs Tk24 lakh to buy. A Toyota Premio car, which I used to sell for Tk35 lakh, now has to be sold for Tk44 lakh. As a result, the dreams of middle class families of owning cars are fading."

He expects that car imports will increase if this proposal is considered. As a result, the government will not experience a decline in revenue, but rather that it will play a role in meeting the revenue target.

Besides, to stabilise the market, the association proposed imposing cubic capacity-based (CC)-specific duty on vehicles, reconstructing the CC slab for hybrid cars, reducing duty-tax on sport utility vehicles, and reducing supplementary duty to popularise electric vehicles.

Certain groups misuse duty benefits: NBR chairman

"We aim to provide duty benefits for the benefit of the local industry. However, the issue arises when certain parties exploit this facility, leading to detrimental effects on the industry and sector as a whole. Therefore, we must carefully consider these benefits," said the NBR chairman.

"Nevertheless, if there is a high duty on the import of chemicals used in the manufacturing process of certain products, there is no problem in reducing them," he added, emphasising the need to prevent misuse.