The country's motorcycle assemblers Wednesday urged the government to withdraw 15 per cent supplementary duty (SD) rise and compulsory import of unpainted CKD parts in the proposed budget for 2015-16 fiscal year.
They said the new proposal would not increase revenues as the government expects. Rather market shrinkage would decrease revenue earnings.
"We fear such a budgetary proposal will result in increase of motorcycle prices from Tk.15,000 to Tk.20,000 per piece. This would go beyond customers' buying capacity," President of Bangladesh Motorcycle Assemblers and Manufacturers Association Matiur Rahman told a press conference.
Around 10 local manufacturers attended the press conference at a city hotel. These are Uttara Motors Ltd, TVS Auto Bangladesh, Bangladesh Honda Private Ltd, Nitol Motors Ltd, Rankon Motor Bikes Ltd. Navana Ltd, Karnaphuli Ind. Ltd, Rasel Industries Ltd, H S Enterprise and Rupsha Automobiles.
He said the budgetary proposal would not only affect the assembling industry but also hit adversely thousands of dealers and associated business concerns. Thousands of workers and employees may become jobless.
He said total sales of motorcycles will drop to 100,000 due to duty increase in the proposed budget and thus the government will lose huge revenue.
Finance Minister Abul Mal Abdul Muhit proposed an increase in Supplementary Duty on CKD Motorcycle from 30 per cent to 45 per cent with a condition that CKD components will be imported unpainted.
"For increasing SD in the budget, the total tax impact of motorcycle assembling industry has become 131 per cent. On the other hand, total taxation of registered motorcycle manufacturing company has been kept unchanged at 25 per cent which is no way justified," Matiur Rahman said.
He said the impact of 131 per cent on CKD motorcycle is equivalent to the taxation level of a luxury car of 1500CC.
He said establishing a paint-shop would require an investment of Tk 250 million to Tk 300 million which will not be possible to be invested by many assemblers.
"So it is feared that many companies will be compelled to shut their businesses," he said.
He also said the establishment of a paint-shop will require gas and electricity connections at a time when the existing industries do not get required power and gas supply.
He said the volume of motorcycle sales has been decreasing continuously since 2010-2011 financial year from 255,000 pieces to 175,000 pieces.
He said Bangladesh is a densely-populated country having around 160 million people, but the present market is for 200,000 units.
Replying to a question, he said proper and logical duty structure will help expand and flourish this assembling industry and many of the assemblers will be encouraged to be manufacturers.
Bangladesh Honda Private Limited Managing Director and chief executive officer(CEO) Yoichi Mizutani said if this tax structure remains, foreign investors will review their decisions to continue business in Bangladesh.
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