Cheers for local manufacturers
The budget has brought good news to local manufacturers of medicines, steel and fabrics as the government cut duties on raw materials imports.
Finance Minister AMA Muhith has proposed to reduce customs duties on 40 basic raw materials—used in the manufacture of medicines—to a 5 percent concessionary rate from the existing 10-25 percent.
“The move will boost growth of the pharma sector,” said Salman F Rahman, president of Bangladesh Association of Pharmaceutical Industries.
The move will make substantial cuts in prices of locally manufactured medicines, said Rahman, also vice president of Beximco Group.
Customs duties on 14 items used in anti-cancer medicines have been withdrawn, with other existing concessionary rates applicable to the sector remaining unchanged.
Anti-cancer medicine producers and cancer patients will benefit from the measure, said Mohammad Ebadul Karim, managing director of Beacon Pharmaceuticals, a listed company.
The association demanded waiver of duties on 49 items used in producing anti-cancer medicines, Karim said.
Beacon Pharmaceuticals is the market leader with 31 percent of the country's anti-cancer drug market, followed by Roche Bangladesh, the local arm of the Swiss healthcare company, at 24 percent.
Muhith also recommended increasing taxes on the imports of billets, the raw material for steel bar manufacturing, to Tk 5,000 from Tk 3,500 a tonne.
The government's move to increase import duty on billets will help protect the local steel industry, said Md Shahjahan, secretary general of Bangladesh Steel Mill Owners.
It brought some cheers to some manufactures that are also developing billet producing units, he said.
But the government also hiked duty on imports of melting scrap, a billet raw material, by Tk 500 for each tonne to Tk 2,000.
“We urge the government to reduce duty on imports of melting scrap,” Shahjahan said. The price of electricity should be the same for big and small manufactures, he added.
Aameir Alihussain, managing director of BSRM, a listed steel maker, is far from optimistic, as he said the country is yet to become self-sufficient in producing billets, which means most manufacturers will have to depend on imports.
Local steel producers can meet only half of the industry's demand that runs into 3.5 million tonnes a year, Alihussain said. “It will increase prices of rods and create market instability.”
Muhith's proposal to reduce supplementary duty on imports of woven fabrics from 30 percent to 20 percent will hurt local fabrics manufactures such as Square Textiles and Envoy Textiles, said Salam Murshedy, president of Exporters Association of Bangladesh.
But it will help garment companies that depend on imported fabrics, BRAC-EPL, a leading stockbrokerage, said in a budget analysis.