Agro-processors call for review of new fiscal proposals
Thursday, 28 June 2007
The Bangladesh Agro-Processors Association (BAPA) has highlighted some of the issues relating to the proposed budget for fiscal 2007-2008., According to it, as per the proposed Budget (2007-2008) duty and taxes on imported finished products will be 11.19 per cent, less than existing duty and taxes.
This will discourage the growth of local industry and also make them less competitive. The details of the calculation are as follows:
BAPA has requested the concerned authority to increase supplementary duty from proposed 60 per cent to 100 per cent so that the local industry is encouraged to expand manufacturing which will benefit the economy as a whole.
Cellular is made from other plastic, vulcanised, metalised or similar plastic (printed form) under H.S. Code # 3921.90.91. A lot of materials are imported in printed form and used in food industry as basic packing material.
The net impact of the proposed fiscal measures on this industrial packing material is 60.69% higher than that of the existing arrangement under the outgoing fiscal.
With the increase in the price of raw material, i.e packaging, the cost of production of local finished snack product will go up making agro-processing units also non-competitive in the domain domestice market compared to such imported products. According to the BAPA, it will adversely affect the local agro-based milk production and marketting industry, which provides ample employment opportunities in the rural areas and supplement farmers’ income.
Details of the BAPA calculation are as follows :
The BAPA has made an appeal to fully withdraw the proposed supplementary duty (60%) on the above-mentioned item (printed form) i.e. SD from 60% to 0% to encourage the local food industry to grow so that export is encouraged as supplementary duty is not refunded in by the DEDO and also to make such products in competitive in the domestic market.
Under proposed budget description of goods changed to Asceptic Pak from Tetra Pak/Aseptic Pak and as a result, the H. S. Code changed to 3923.90.50 where the rate of duty is 15%, the BAPA noted in its news release. All of 5% duty rate has been proposed to be changed to 10%. But in this case, duty increased to 15% instead of 10%. As a result, the net impact would be 7.5% higher than existing rate, the BAPA pointed out while providing the detailed calculation thereof as follows :
Previous HS Code was 4811.59.10 and item name- Tetra Pak/Asceptic Pak and the proposed HS Code 3923.90.50 for the same item now to be named as Asceptic Pak. Tetra Pak / Ascetic Pak are the basic packing materials for agro based food manufacturing industries.
This packing material is basically used for packing liquid milk which is most essential for the children and also packing of juice from fresh mango, pineapple etc., 100% local agricultural products and brought locally from the rural areas, according to BAPA. It has urged for reconsidering the rate of duty from 15% to 10% on the item as it is 100% meant for industrial use. Moreover always Tetra Pak / Asceptic Pak are imported in printed form and as result no one can use it except for industrial purpose.
About the import of capital machinery, the BAPA has noted that the hitherto duty was only 5.0% (under the benefit of statutory regulatory order.
The proposed duty under the forthcoming fiscal. Hence there is the BAPA has pointed out, there will be a 10 per cent.net increase of 5.0 per cent duty rate.
This will increase the project cost and as a result, investors will be shy away from making new investment in the light of the changed situation under the proposed rate.
The Association has requested for reconsideration of the issue and also for providing the facility to investors at 0% duty on capital machinery under the SRO benefit, instead of the proposed 10% duty.
About withdrawal of value added for (VAT) on products, the BAPA has observed that VAT is levied on milk products like flavoured milk with high tariff, powdered milk, condensed milk, milk candy, yogurt etc., while white milk, butter and ghee are VAT-free. It has proposed for declaring the aforementioned item Vat-free in order to encourage milk production and consumption of milk products by the population, especially children.
Responding to the new fiscal relating to VAT on PVC pipes used for tube well/irrigation pump, the Association has pointed out that presently hand tube well/irrigation pumps are VAT exempted at the production level. On the other hand the major parts for installing tube well and irrigation pump i.e.PVC pipes, filters, hose pipes, coils pipes are VAT able items.
To facilitate the farmers in using PVC pipes, filters, hose pipe, coil pipes etc., the items, as noted above, should be VAT exempted like hand tube well, irrigation pump etc.
This will help bring more areas under irrigation which has been the key to progress of the country in the agricultural sector at the farm level.
Calling upon the government to consider to consider the issues that the Association has highlighted, it has stated that agro processing sector has been recognised as a "Thrust Sector" by the government and hence its development on sustained basis needs effective policy supports.
All successive governments encouraged agro-processing sector in general and more particularly the dairy sub-sector in view of its capacity to generate employment and reduce poverty in the rural areas. The BAPA has emphatically observed so while noting that this is the only sector which employs more than 70% women labour in its workforce in the rural areas. Most of them are otherwise destitutes.
The writer is president of the pertinent association
This will discourage the growth of local industry and also make them less competitive. The details of the calculation are as follows:
BAPA has requested the concerned authority to increase supplementary duty from proposed 60 per cent to 100 per cent so that the local industry is encouraged to expand manufacturing which will benefit the economy as a whole.
Cellular is made from other plastic, vulcanised, metalised or similar plastic (printed form) under H.S. Code # 3921.90.91. A lot of materials are imported in printed form and used in food industry as basic packing material.
The net impact of the proposed fiscal measures on this industrial packing material is 60.69% higher than that of the existing arrangement under the outgoing fiscal.
With the increase in the price of raw material, i.e packaging, the cost of production of local finished snack product will go up making agro-processing units also non-competitive in the domain domestice market compared to such imported products. According to the BAPA, it will adversely affect the local agro-based milk production and marketting industry, which provides ample employment opportunities in the rural areas and supplement farmers’ income.
Details of the BAPA calculation are as follows :
The BAPA has made an appeal to fully withdraw the proposed supplementary duty (60%) on the above-mentioned item (printed form) i.e. SD from 60% to 0% to encourage the local food industry to grow so that export is encouraged as supplementary duty is not refunded in by the DEDO and also to make such products in competitive in the domestic market.
Under proposed budget description of goods changed to Asceptic Pak from Tetra Pak/Aseptic Pak and as a result, the H. S. Code changed to 3923.90.50 where the rate of duty is 15%, the BAPA noted in its news release. All of 5% duty rate has been proposed to be changed to 10%. But in this case, duty increased to 15% instead of 10%. As a result, the net impact would be 7.5% higher than existing rate, the BAPA pointed out while providing the detailed calculation thereof as follows :
Previous HS Code was 4811.59.10 and item name- Tetra Pak/Asceptic Pak and the proposed HS Code 3923.90.50 for the same item now to be named as Asceptic Pak. Tetra Pak / Ascetic Pak are the basic packing materials for agro based food manufacturing industries.
This packing material is basically used for packing liquid milk which is most essential for the children and also packing of juice from fresh mango, pineapple etc., 100% local agricultural products and brought locally from the rural areas, according to BAPA. It has urged for reconsidering the rate of duty from 15% to 10% on the item as it is 100% meant for industrial use. Moreover always Tetra Pak / Asceptic Pak are imported in printed form and as result no one can use it except for industrial purpose.
About the import of capital machinery, the BAPA has noted that the hitherto duty was only 5.0% (under the benefit of statutory regulatory order.
The proposed duty under the forthcoming fiscal. Hence there is the BAPA has pointed out, there will be a 10 per cent.net increase of 5.0 per cent duty rate.
This will increase the project cost and as a result, investors will be shy away from making new investment in the light of the changed situation under the proposed rate.
The Association has requested for reconsideration of the issue and also for providing the facility to investors at 0% duty on capital machinery under the SRO benefit, instead of the proposed 10% duty.
About withdrawal of value added for (VAT) on products, the BAPA has observed that VAT is levied on milk products like flavoured milk with high tariff, powdered milk, condensed milk, milk candy, yogurt etc., while white milk, butter and ghee are VAT-free. It has proposed for declaring the aforementioned item Vat-free in order to encourage milk production and consumption of milk products by the population, especially children.
Responding to the new fiscal relating to VAT on PVC pipes used for tube well/irrigation pump, the Association has pointed out that presently hand tube well/irrigation pumps are VAT exempted at the production level. On the other hand the major parts for installing tube well and irrigation pump i.e.PVC pipes, filters, hose pipes, coils pipes are VAT able items.
To facilitate the farmers in using PVC pipes, filters, hose pipe, coil pipes etc., the items, as noted above, should be VAT exempted like hand tube well, irrigation pump etc.
This will help bring more areas under irrigation which has been the key to progress of the country in the agricultural sector at the farm level.
Calling upon the government to consider to consider the issues that the Association has highlighted, it has stated that agro processing sector has been recognised as a "Thrust Sector" by the government and hence its development on sustained basis needs effective policy supports.
All successive governments encouraged agro-processing sector in general and more particularly the dairy sub-sector in view of its capacity to generate employment and reduce poverty in the rural areas. The BAPA has emphatically observed so while noting that this is the only sector which employs more than 70% women labour in its workforce in the rural areas. Most of them are otherwise destitutes.
The writer is president of the pertinent association