The proposed duty hike on imported LPG cylinders in the budget for the fiscal year (FY) 2014-15 has received mixed reaction as the importers have criticised it while the manufacturers have welcomed it.
Finance Minister AMA Muhith in his budget proposal placed in the Jatiya Sangsad on June 5 proposed to increase import duty on LPG (Liquefied Petroleum Gas) cylinders to 25 per cent from existing 5.0 per cent.
The LPG cylinder importers of the country have expressed dissatisfaction over the proposal while the cylinder makers welcomed it.
In his proposal, the finance minister said high quality LPG cylinders are being produced in the country. But local industries are not getting adequate protection as there is only 5.0 per cent customs duty on import.
According to the minister, he has proposed to raise the import duties on LPG cylinders to 25 per cent form existing 5.0 per cent to encourage the industry and to make it competitive.
"The foreign investors are depressed and astonished with the recent budget proposal," Petredec Elpiji Ltd. General Manager Md Saidul Islam told the FE.
"Total import duty to be paid would be 49 per cent from existing 29 per cent if the import duty is raised as per the proposal," he added.
"Currently we are paying 16 per cent value-added tax (VAT), 6.0 per cent advance income tax (AIT) and 4.0 per cent development surcharge with the existing import duty of 5.0 per cent, which is 29 per cent in total," he said.
"The local LPG cylinder manufacturers are not maintaining the international standard, if they are certified from any international organisation, we can easily buy it from them," he continued.
"On the other hand, there is no authority to monitor all the procedure of cylinder making, so it is tough to depend on them on safety issue. So, we are forced to import cylinder from abroad," he said.
Mr Islam said the price of LPG cylinder will increased by Tk 1000 to Tk 1200 more for each cylinder from its recent price if the government implements its decision on import duty.
The importers claimed that the recent duty hike on the imported LPG cylinders will not only destroy the business of some foreign and local investors, but also will put in danger the whole perspective of 'safety' for the common people of Bangladesh.
This product is similar to raw material because without the cylinder, nobody can sell LPG. The government should consider the LPG cylinder as capital machinery not as commodity, they appealed.
This decision will discourage the foreign investment in LPG sector in the country, they observed.
The importers said if the proposal finally comes into effect, the people will buy low-quality cylinders causing extremely high risk of explosion, fire, damage, as there is no local or international standard or certification for proper manufacturing process of LPG cylinders in Bangladesh.
All the cylinders imported are from manufacturers with long proven experiences and international certifications - conforming the safety and quality without questions. These cannot be sourced locally as yet, they mentioned.
There are five LPG operators in Bangladesh - among them, two multi-nationals Petregaz (previously known as Kleenheat Gas) and Totalgaz are importing international quality cylinders. BPC, the only state-owned company, also imports good quality cylinders from abroad.
Another upcoming local company INDEX has already imported cylinders from Thailand.
Now Bashundhara, Jamuna Spacetech and TK Group produce cylinders in Bangladesh.
Bashundhara LP Gas Ltd and Sundarban Industrial Complex General Manager Md Jahidul Islam said: "We welcome the proposal for raising import duty on LPG cylinder as it will encourage the local LPG cylinder manufacturers."
"Our company has laboratory and certification and we are producing quality LPG cylinders. We are producing the 20,000 cylinders per months whereas we have the capacity to produce 90,000 cylinders."
"We are supplying our LPG cylinders to Bin Habib Group, a Chittagong-based company," Mr Jahid said.
He said: "We produce cylinders by importing brand new steel-sheets from Japan and hot roll coil from Korea. We use automated MIG welding, heat treatment with 680 degree centigrade, pressure test, zinc metalising before colour coating."
"All the products are certified and checked by explosive department of Bangladesh. We are also communicating with DNV and Intertek, inspection and certification bodies, which will come to test material, lab equipment and others after the agreement," he added.
He also urged the government to rethink about the proposal to raise import duty on hot roll coil from 3.0 per cent to 10 per cent, as it is an important material for the LPG cylinder manufacturers.
Mixed reaction to proposed duty hike in imported LPG cylinders
Sonia H Moni | Published: June 17, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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