Auto, tyre makers to get tax privileges

The government is going to offer a tax break to the automobile, tyre and bicycle manufacturing industries, to promote growth and investment in these sectors.

Finance Minister AMA Muhith rolled out the tax benefits while placing the budget proposal in parliament for fiscal 2015-16 yesterday.

He said numerous steps have been taken to foster new industrial ventures to fulfill the present government's electoral pledge to enhance investment and increase employment opportunities.

Special incentive packages are on the cards to encourage investment in developing the Bangladesh Economic Zones and Hi-Tech Park, he added.

Earlier, NBR finalised tax breaks for investors and developers of economic zones for a period of 10 years to encourage local and foreign investment, job creation and disciplined industrial expansion in Bangladesh.

Muhith proposed a tax holiday for automobile manufacturing as a heavy industry, citing increasing demand for vehicles, use of the domestic workforce, and reduced pressures on foreign currency to import vehicles.

The initiative comes years after state-run Pragati Industries started assembling Mitsubishi's Pajero Sport for the local market.

Industrial giant PHP signed a deal with Malaysia's Proton in March to assemble 1,200 sedans a year at its factory in Chittagong -- a move that is expected to reduce the country's dependence on imported cars. Muhith said huge foreign currency amounts are spent every year to import tyres.

Bangladesh's dependence on tyre imports is likely to decline in the days ahead due to a rise in local manufacturing, he added. Currently, companies such as Apex Husain, Gazi Group, Meghna Group and Rupsha Tyre make tyres for light trucks, minibuses, microbuses, motorcycles, auto rickshaws and easy bikes.

In addition to local players, India's tyre giant CEAT is setting up a plant in Bangladesh in partnership with AK Khan & Company.

Bangladesh spends around Tk 1,000 crore to import more than 15 lakh pieces of tyres a year, mainly from India, Japan and China, according to importers, distributors and sellers.

Muhith suggested giving a tax holiday for tyre manufacturing industry as well.