Photo: Messenger
In his inaugural budget, newly appointed Finance Minister Abul Hassan Mahmood Ali has increased the import duty on raw materials from 3 percent to 5 percent. However, this move has sparked concerns among businesses regarding the potential impact on their operations.
Experts believe that the government's decision aims to regulate imports in order to conserve foreign currency reserves and curb instances of money laundering.
S M Mannan Kochi, President of BGMEA told the Daily Messenger “During the adverse economic situation, we need the support of the government so the business can survive. We need to cut the source tax rather increase of import tax.”
The budget for the Ministry of Industries in FY2024-25 has been allocated Tk 2,510 crore, a decrease from Tk 3,024 crore allocated in FY2023-24.
Muhammad Hatem, Executive President of Bangladesh Knit Wear Manufacturers and Exporters Association (BKMEA) told the Daily Messenger “This kind of tax impose will slow the business expansion. Already, the businesses are paying bank interest against loan but they cannot import machineries due to dollar crisis.”
Moreover, due to the increase of raw material import tax, doing business will be expensive and difficult as the buyers are reluctant to hike the price.
During the period from July to March, Bangladesh witnessed a notable decline in the import of various RMG-related goods. According to Bangladesh Bank data, imports of cotton decreased by 24.9 percent, accessories by 8.2 percent, dyeing components by 3.1 percent, fiber by 6.1 percent, machinery by 23.7 percent, and capital machinery by 21.81 percent. This decline can be attributed to the ongoing dollar crisis in the country.
The contribution of the industrial sector to GDP was 24.3 percent in FY 2007-2008, which increased to 37.65 percent in FY2022-23. In line with the Eighth Five Year Plan, the government is focusing on industrial expansion to increase the contribution of industry to GDP to 41.86 percent.
Despite all adversities caused by Russia-Ukraine war and other global unrests, Bangladesh managed to achieve 7.10 percent, 5.78 percent and 5.82 percent (provisional) growth in 2021-22, 2022-23 and 2023-24 respectively which is a testament to the inherent strength of our economy.
The finance minister in his budgetary speech said, to maintain this growth in future, all reasonable supports will be continued to encourage the agricultural and industrial production. Side by side, proper implementation of important infrastructural projects and adoption of appropriate action plan aimed at increasing export earnings and remittances will be helpful for achieving the desired GDP growth.
It is expected that pursuing all the prudent policy measures will help achieve GDP growth of 6.75 percent in the next fiscal year and 7.25 percent in the medium term.
As a result of various steps taken by the government, the export earnings increased five times to $55.56 billion in FY2022-23 compared to FY 2005-06. During July-April of FY2023-24, the export earnings reached USD 47.5 billion, which is 3.93 percent higher than the corresponding period of the previous fiscal year.
The import decreased by 15.81 percent in FY2022-23 due to the reduction of import of less important and luxury consumer goods which essentially eased the pressure on foreign exchange reserve. This policy of controlling the import of less important and luxury consumer goods continued in the current fiscal year and the import volume during July-March has decreased by 15.5 percent compared to the same period of the previous year.
Messenger/Disha
