Investment to the country’s economic zones and high-tech parks is being incentivised by allowing the duty-free import of capital machinery, construction material and development equipment, according to government gazettes.
The economic zone governing board is considering a raft of other proposals to draw investors and developers, and their capital and know-how, to the country.
Investors are now allowed to import, duty-free, raw materials and construction materials that are not available in the country. Industrial units may also import two duty-free vehicles for manufacturing related purposes, the official gazettes said.
On July 1, the National Board of Revenue (NBR) issued separate Statutory Regulatory Orders (SROs) to establish economic zones and high-tech parks under the Bangladesh Economic Zone Authority (BEZA).
BEZA executive chairman Paban Chowdhury said the benefits will encourage foreign and domestic investment and lead to economic growth.
“Not just VAT and custom duty waivers, but many more incentives are being considered to attract investment,” Paban told the Dhaka Tribune yesterday.
Finance Minister AMA Muhith said on June 4 while placing the budget for fiscal year 2015-16 in parliament: “Special incentives packages are on the cards to encourage investment in developing Bangladesh’s economic zones and high-tech parks.”
He proposed to allow full exemption of existing VAT on the electricity bill of developers of high-tech parks and on the procurement provider services of developers and investors.
Former Federation of Bangladesh Chamber of Commerce and Industry (FBCCI) president Mir Nasir Hossain said economic zones are always attractive to foreign and domestic investors because they offer secure land and other benefits.
“The economic zones will encourage investment for sure since industries can get tax breaks, duty-free benefits and depreciation facilities to establish business units in the zones,” he said.
He pointed out that the most attractive thing for investors was not tax waivers but dependable utilities and infrastructure.
According to NBR gazettes, developers and investors of the economic zones and high-tech parks will be completely exempted from custom duties, regulatory duties, supplementary duties and Value Added Tax for imports of materials that are unavailable in the country.
Developers and investors will not be allowed to benefit from the duty and tax exemptions to import construction materials that are available in the country such as MS rods and bars, cement, pre-fabricated materials, iron and sheet steel.
Products that are not directly involved in the construction of the economic zones will not benefit from the exemptions either. These include office machinery, air conditioners, refrigerators, passenger vehicles, household goods, food products, drinks and commodity goods.
Industrial units in both the economic zones and the high-tech parks will be allowed to import two vehicles, duty-free, including a sedan with a less than 2000cc engine or micro-buses, pick-up vans or double-cabin pick-ups.
The importers, however, will not be allowed to transfer ownership of the vehicles for five years after importing them. Investors can import vehicles duty-free only once under the benefit.
NBR officials said the revenue authority had already finalised another tax incentive for both developers and investors under BEZA.
Investors will get a 10-year tax holiday while developers will get a 12-year tax holiday for investments in the economic zones, NBR officials said.
The revenue authority will soon issue two separate SROs, they added.
The government has given approval for the establishment of 30 public and private economic zones across the country.
Implementation is progressing quickly in Sirajganj, Mongla, Mirsarai, Anowara and Sylhet, BEZA officials said. Construction of high-tech parks in Sylhet and Kaliakoir and of an ICT Village in Mohakhali is under way.
The government plans to establish 100 economic zones across the country over the next 15 years, which is expected to increase export earnings by US$40 billion and generate about 10 million additional jobs.