Toy makers staring at happy days ahead

The domestic toy industry is expected to flourish in the days ahead thanks to the VAT exemption and customs duty reduction extended to certain parts and accessories that it uses.

From fiscal 2015-16, toy makers can import inputs by paying only 5 percent customs duty, a development that will push down production costs significantly, Shajahan Mojumder, president of Bangladesh Toy Merchants, Manufacturers and Importers Association, said.

"The government has done a commendable and much-needed job, as it will make the locally-manufactured toys competitive against the imported ones," he said.

Also the managing director of Bangladesh Everest Toys Industry Ltd, Mojumder said the local manufacturers will be able to make toys at half the cost of China's after the duty reduction.

At present, the country spends Tk 5,000 crore a year to import toys, parts and accessories, mainly from China, according to Mojumder.

Currently, more than 100 local manufacturers, mostly small, are engaged in plastic toy making.

However, the domestic manufacturers can meet only a small portion of the demand, which is rising, thanks to the growing purchasing capacity. More than 80 percent of the demand is met through imports.

While the domestic toy making industry has increased fast in the last three to four years, it is not enough to meet the local demand, Mojumder said.

Md Jashim Uddin, president of Bangladesh Plastic Goods Manufacturers & Exporters Association, said toys hold great export potential as it is a labour-intensive industry.

“The labour cost in China is rising, whereas we have abundance of unskilled and cheap labour. Women can also make toys at home. So we will be able to compete in the international market,” Mojumder said.

China controls 90 percent of the global toy market, according to Jashim Uddin.

Mojumder also urged the government to set up a toy park like in China. The global toy market stood at $84 billion in 2012, with the market expanding every year, according to the Toy Industry Association Inc.

In the proposed budget, the National Board of Revenue offered reduced duty at 5 percent for sticker papers (non-printed), self-contained electric or non-electric motors, parts and accessories, remote controls for electronic and electrical apparatus and gear boxes.

Previously, the duty for remote controls and self-contained electric or non-electric motors was 25 percent and 10 percent respectively.

To enjoy the benefit, the businesses must have VAT registrations. They will also have to give guarantee in non-judicial stamp that the parts and accessories will be used for toy making.

In addition, an inspection will be carried out by VAT officials to see whether the imported items are in fact being used to make toys.

In case of partial use of the items for toy making, the reduced duty benefit will be withdrawn, according to a notification from the NBR.

However, there are concerns about the industry.

Environment and Social Development Organisation (EDSO), a not-for-profit body, in a study titled 'Toxic Toys: Heavy Metal Content & Public Perception in Bangladesh' said it found presence of heavy metals that were above the recommended limit in the US and the EU in toys sold in the markets of Dhaka.

EDSO said most of the toys contain high levels of toxic metals such as lead, mercury, cadmium, bromine and chromium, all of which pose health risks such as learning disability, hormone problems and cancer.

There is no proper regulation in Bangladesh regarding toxic metals in toys, due to which such items are being imported from different countries of the world, the report said.

Mojumder said the government can formulate standards regarding heavy metals in toys to facilitate healthy expansion of the sector.