Manufacturing 'Made in Bangladesh' top priority

The government is determined to establish the 'Made in Bangladesh' brand in the development of mega industries in the country and the creation of import alternative industrial production. Initiatives are being taken to further increase the prices of imported luxury goods in the upcoming fiscal year 2024-25 budget. Therefore, the consumers of these products may be upset with the new budget that will be effective from July 1. But domestic entrepreneurs of the same product can swallow a sigh of relief. Various such initiatives are being taken to promote and protect the domestic industry.

At present, import duties, advance income tax, value added tax, supplementary duty and regulatory duty are levied on import of goods.

Talking to the officials of the Ministry of Finance and National Board of Revenue (NBR), it is known that this rate is likely to increase in the next budget in the case of importing goods. So, in the next financial year, the import of luxury goods will surely be taxed higher than before. They said that they are working on this policy now.

According to sources, the government has taken a decision in principle to reduce the corporate tax rate to 2.50 percent for both listed and non-listed companies as it emphasised on 'Made in Bangladesh'. In case of listed institutions, this rate is supposed to come down to 17.5 percent. For non-listed companies, the corporate tax rate will drop to 25 percent. However, it is reported that the corporate tax rate will remain unchanged in the case of banks and mobile operators. People concerned said that as a result of this initiative, companies will be encouraged to get listed in the capital market.

The government is also working on initiatives to withdraw tax exemptions from the poultry and fisheries industries. The purpose of the tax exemption is to help domestic industries become more competitive. An NBR official said that poultry and fish are not imported. So there is no competition with foreign producers. According to him there is no need for tax exemption for these two sectors. Rather, if the tax exemption is withdrawn, the local industries will be forced to improve their quality.

According to the official, there are a large number of small producers in the poultry and fisheries sector, who are out of the ambit of the tax. "You can say that there is perfect competition in these sectors, as it is defined in economics. Tax officials are yet to reach them. As a result, even if the tax exemption services are stopped, there will not be much impact on them. The good side is one of the many avenues of tax evasion is closed."

Perfect competition in economics is the existence of a large number of producers willing and able to supply a homogeneous product at a given price. As a result, one cannot influence the price of the product much at the individual level.
According to NBR sources, there is no separate definition of luxury goods. Earlier, AC, fridge and car were in the category of luxury products, but in the current context, people see the product as a daily necessity. Still, a policy decision has been taken to increase the duty rate on foreign AC imports. No one will be encouraged to buy an AC from a domestic company if they get an AC from a foreign company at a comparable price. Its main objective is to protect the domestic industry. The higher the tariff is the more luxury the product is.

He also said that Advance Income Tax (AIT) may be raised on certain products. Or all kinds of supplementary duties and rates may be hiked. NBR still has time. However, he believes that the prices of products like cars, fridges and ACs will undoubtedly increase.

On the other hand, if the import decreases, the country's reserve situation will be in a satisfactory state, according to the officials concerned. According to the statistical analysis of Bangladesh Bank, the reserve of the country on March 20, 2024 was 25.25 billion US dollars. A year ago this reserve was 31.25 billion dollars. The dollar market is bullish due to the Russia-Ukraine war after the global coronavirus pandemic. So the government decided to curb the import for a long time. It is said that this program will be accelerated in this year's budget.

At the same time, the 'Made in Bangladesh' agenda will be further encouraged in this initiative. Domestic producers will be encouraged to improve the quality of their products. As a result, the country will become self-sufficient and will need to import certain products. In addition to employment, domestic industry will be established. There is also the matter of saving dollars.

Recently in the pre-budget discussion NBR Chairman Abu Hena Md. Rahmatul Muneem informed about strengthening the 'Made in Bangladesh' brand. He suggested reducing imports and increasing exports to face the challenges after exiting LDCs.