• Saturday, Nov 23, 2019
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Refrigerator manufacturers seek 1% customs duty on raw materials

  • Published at 09:39 pm March 28th, 2019
Workers assemble a new batch of refrigerators at the Walton Hi-Tech Industries Limited factory at Chandra, Gazipur Courtesy

The prices of locally-made refrigerators would come down sharply if the existing high tariffs are lowered, the proposals added

Bangladesh Refrigerator Manufacturers and Exporters Association (BRMEA) has demanded lowering the customs duty to 1% on importing basic components and raw materials used in manufacturing compressors for refrigerators.

As nearly 200 types of raw materials are imported to manufacture compressors by local refrigerator makers, the items are currently subject to 5 to 25% customs duty, the association said in its budget proposals to the National Board of Revenue (NBR) last week.

The prices of locally-made refrigerators would come down sharply if the existing high tariffs are lowered, the proposals added.

A high official at the revenue board said they have received the proposals and kept those under consideration for the upcoming budget.

Besides customs duty, manufacturers have to pay other taxes, like value added tax (VAT),regulatory duty and supplementary duty, at import level for importing the same items.

The association said if the NBR cuts the taxes in the proposed budget, it would boost compressor exports with competitive prices, as well as help expand the local market of refrigerators.

The budget proposals, signed by BRMEA president SM Ashraful Alam, said those who are producing compressors for refrigerators now will become experts in making automobile engines someday.

The proposals said a minimum of 200 backward linkage industries, including iron foundry and casting, motor, enamel wire, sheet metal, plastic and metal machinery, are directly involved with the manufacturing of refrigerator compressors.

Furthermore, the association said there is a huge opportunity for creating employment by promoting the sector, as Bangladesh now exports refrigerators to a number of countries, such as Slovakia and Austria. 

However, the number of compressor producing country in the world is only 15 and  Bangladesh has just registered its name on the list, BRMEA said in its proposals.

Available scrap steel, comparatively low-cost labour and utility in the country can lead the compressor industry to become a vibrant industry in the near future if policy supports are ensured by the government, the traders said.

Already, the local industry has shown it can sell compressors at 30% lower prices, compared to the prices of imported ones, they added.

“So, our potential refrigerator industry needs incentives, like tax exemptions, to compete with global brands in both the local and international markets,” said the proposals.

The proposals added that though traders have to pay minimum 5-25% customs duty for importing basic components and raw materials for manufacturing compressors locally, the importers of compressors pay only 5% customs duty, creating an uneven competition for the industry owners.