The proposed budget for the 2024-25 fiscal year includes a significant measure aimed at boosting the domestic aviation sector: the exemption of VAT on the import of aircraft engines, engine parts, and turbo-propellers, reducing the tax from 15% to 0%.
This move has been welcomed by the Aviation Operators Association of Bangladesh (AOAB), as it also covers the import of turbo-jet and turbo-propeller parts.
During his budget speech on Thursday, Finance Minister Abul Hassan Mahmood Ali said that the removal of VAT on spare parts for aircraft engines and propellers at the import level is intended to strengthen the domestic air industry, which has struggled to compete with foreign airlines that currently hold about 75% of Bangladesh's aviation market.
Despite this positive development, AOAB leaders have emphasized the need for duty exemptions, which they believe would have a more direct impact on customers.
Prominent aviation expert Kamrul Islam noted that the government has finally met their long-standing demand, though it is late. “We expected the proposal. But I think it is not only the airlines, air passengers will also benefit from it.”
Minister Mahmood Ali said in parliament there has been a significant growth in both passenger and cargo air transport over the past 15 years, driven by the substantial growth of the country's economy. Domestic air travel has also surged due to changing travel preferences among Bangladeshis.
To meet global standards, the government has undertaken several projects to modernize air transport and related services. This includes the revamping and expansion of runways and taxiways at Hazrat Shahjalal International Airport, Cox's Bazar Airport, and Osmani International Airport to enhance aircraft safety during take-off and landing, said the minister.
The proposed budget allocates Tk5,695 crore to the Ministry of Civil Aviation and Tourism for the 2024-25 financial year, which is Tk655 crore lower than the revised budget of Tk6,350 crore for the fiscal year 2023-24.
Tourism
In the tourism sector, the government is implementing a 25-year Tourism Master Plan aimed at contributing to Bangladesh's economic development through tourism.
The finance minister projected that, if implemented successfully, the tourism sector could contribute $4.77 billion to the national economy by 2041.
The master plan focuses on developing eco-tourism, heritage tourism, and business tourism to meet growing domestic and international demand.
Plans are underway to construct tourist facilities at Tanguar Haor, Nijhum Island, Sharankhola in the Sundarbans, Sompur Mahavihar in Paharpur, and a tourism complex at the Mawa-end of the Padma Bridge.
Destination Management Organizations (DMOs) have been established in these areas to attract tourists. Additionally, the government is providing advanced training and registration for all tour operators and guides to foster a sustainable tourism industry.
New tourist centers are being developed in Parki in Chittagong, Hatia and Nijhum islands in Noakhali, and Mahananda in Chapainawabganj district. There are also plans to develop international-standard tourism facilities in Rangpur, Chandpur, and Cox's Bazar, the minister said.
