Import duty cut threatens \\\'thriving local industries\\\'

The tariff reduction proposed in the budget for the upcoming fiscal year (FY) 2015-16 on import of more than 50 products will pose a threat to thriving local industries, insiders said.
They said Bangladeshi manufacturers won't be able to compete for the prices of those products due to tariff reduction.
If the tariff rate (supplementary duty or SD) on import of those products related to some key industries, including plastic, agro processing, confectionery, ready-made garments and home textiles, printing and cosmetics as well as toiletries is implemented, the sectors will be hit hard, they added.
Import duty on plastic products including crockery, artificial flower and foliage, plastic bags and sacks, toothbrush, confectionery items like biscuit, wafers, other agro processed foods like jam, jelly, printed books and other printed products, 17 categories of men's and women's wears and underwear, cosmetics and toiletries like toilet paper, cleansing tissue, handkerchiefs, home textiles like bed sheets, tablecloths and other products has been eased significantly in the proposed budget.
The government has proposed a reduction in import duty on those products by 15 to 10 percentage points from previous 60 per cent to 45 per cent, from 30 per cent to 20 per cent and 20 to 10 per cent based on categories of products.
Sector insiders and experts said earlier higher import duty helped the industries maintain a sound growth and become almost self-sufficient in those products.
And even, many of the products including all kinds of plastic products, biscuits, jam, jelly and all kinds of dresses and undergarments, printed materials and toiletries emerged as mainstream exportable items, they said.
Bangladesh Plastic Products Manufacturers and Exporters Association president Md Jashim Uddin said the country has almost become self-sufficient in plastic industry, supplying more than 1,000 categories of products.
Apart from the private sector's move, he said, higher import duty and government's policy supports also helped the sector emerge as an export-oriented one worth US$ 100 million.
And local makers have been able to beat Chinese and Indian products only through such comprehensive initiatives, maintaining a 20 per cent growth.
He said local manufacturers are now laying emphasis on domestic markets apart from export following recession in some key destinations.
"The government has proposed reduction in SD on many plastic products to only 45 per cent from existing 60 per cent. The government should review the decision to protect 7,000 plastic industries which employ nearly 1.0 million people," he added.
Md Khurshid Alam, managing director of Matador Group, the biggest ball point pen and toothbrush company in the country, told the FE that ten toothbrush companies in the country can now supply nearly 200 million pieces of world class brushes a year which is almost double that of demand.
He said Chinese low-cost toothbrushes will flood the market if the proposal is implemented as their products are cheaper because of their own raw materials like nylon and plastic.
President of Bangladesh Bread Biscuit-O-Confectionery Prostutkarak Samity Mohammad Jalal Uddin said local confectioneries are now exporting biscuits and toasts.
M A Taslim, an economics professor at Dhaka University, said prices of many products will decline if the proposal is implemented.
Local companies will have to enhance their capability to sustain and compete in the market without support of SID, he said, adding that local industries need to develop their competitiveness as SID might be brought down to a nominal rate in the coming years.
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