The government is set to announce a massive change in import duty structure in the upcoming budget reverting to four-tier system after two years and lowering duty on capital machinery, officials said Thursday.
The present three-tier duty structure of 10, 15 and 25 per cent is expected to be replaced by a four-tier one with the highest duty kept unchanged for finished items at 25 per cent, intermediate goods 15 and 7.0 per cent and the lowest 3.0 per cent.
The import duty on capital machinery would be reduced to three per cent from the existing five per cent, set last year through special statutory regulatory orders, an official said.
The duty on the import of hundreds of industrial raw materials and some vital intermediate goods would be set at 7.0 per cent, down from the existing 10 per cent.
Officials said the change in duty structure would boost industrial growth as the import of capital machinery, hundreds of raw materials and intermediate goods would be cheaper, cutting the cost of doing business in the country.
"We are hopeful it will provide a much needed impetus to the country's industry. More and more people will now come forward to set up factories due to the reduced duty," the official said, speaking on condition of anonymity.
The country's industrial growth came down sharply to around 8.0 per cent from a record 12 per cent in the 2006-7 fiscal amid sluggish investment due to a nationwide crackdown on corruption.
The import of capital machinery went into the negative territory in the outgoing fiscal year, after more than a decade of double digit growth, as the investors kept their money idle in the banks.
Chairman of the National Board of Revenue Mohammad Abdul Mazid confirmed the re-introduction of the four-tier duty structure, but he would not reveal the rates.
"We are planning to raise the number of duty slabs to four from the existing three to boost the country's industrial growth," Mr. Mazid told the FE.
"In the upcoming budget, our target is to promote local manufacturing sectors. We want them to grow fast so as to create more jobs for our youths and be competitive in an increasingly tough export markets," he said.
Mr. Mazid said the next budget would not give too much protection to the local industries, despite calls by the trade bodies for wholesale cut in duties.
"We want to maintain a fine balance in the duty structure. Our aim is to foster the growth of industry, but we will not do it in a way that makes them weak and dependent," he said.
Officials said basic raw materials that are enjoying duty-free access in the outgoing fiscal year, will continue to enjoy the same in the next fiscal budget.
"The government will not impose any additional duty burden on basic raw materials," another official said, adding that next budget would satisfy most of the demand of the trade bodies.
Some 505 products enjoyed duty-free access in the 2006-07 fiscal year. In the current fiscal, the government gave zero duty status to only 227 items, including life saving medicines and some food and essential commodities.
The country had four-tier duty structure till 2005-6, but the number was cut down to three and the highest rate lowered to 25 per cent at the insistence of the World Bank and the International Monetary Fund.
Both the multilateral lending agencies have blamed the country's higher duties for poor industrial growth and weak competitive advantages.
According to a World Bank study, Bangladesh's import duty is the highest in South Asia.
Govt set to re-introduce four-tier duty structure after two years
Doulot Akter Mala | Published: May 30, 2008 00:00:00 | Updated: February 01, 2018 00:00:00
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