Home ›› 07 Jul 2022 ›› Front
Despite an increase in cultivation, production and export of rubber in Bangladesh, a tariff disparity inspires the country’s rubber-based industry to import the primary industrial input.
There is a 15 per cent Value Added Tax (VAT) on locally produced rubber while importers of synthetic and natural rubber need to pay only five per cent import tax, said the officials of the Bangladesh Rubber Board.
Cultivators and traders of locally produced rubber often hide the actual information of their production or sales for the high tax, they added.
Rubber plays a substantial role in industries of automobile, tyres, footwear, clothing, electric cables, gloves, foams, adhesives, balloons etc as a primary input.
The yearly demand for rubber is more than 1,00,000 tonnes and most of it is consumed by the industries of toys, tyre-tube, and footwear, said Mohammad Kamal Uddin, the immediate past president of Bangladesh Rubber Garden Owners’ Association.
Bangladesh now produces 67, 939 tonnes of rubber a year on 1,40,000 acres of land in 1,304 gardens in the private sector and 28 in the public sector, says Bangladesh Rubber Board (BRB). Just two years ago, rubber was cultivated on less than 1,00,000 acres of land and the production was around 20,000 tonnes, says the board.
The Bangladesh Forest Industries Development Corporation (BFIDC) also supervises rubber cultivation and 38,067 acres of rubber gardens are under its supervision where 5,972 tonnes of rubber is produced. Most of such gardens are in the Chatttogram region.
Sixty per cent of the locally produced rubber is supplied to local industries and the remaining 40 per cent is exported after processing, said BRB Chairman Syeda Sarwar Jahan.
According to the Export Promotion Bureau (EPB), in FY2021-22, Bangladesh’s exports earnings from rubber grew by 36.74 per cent to $47 million, which was $34 million in the previous fiscal year. The amount was $26.22 million in FY 2019-20.
The National Broad of Revenue (NBR) data shows Bangladesh imported rubber and rubber products worth Tk 2,736.17 crore in the 2020-21 fiscal year which was Tk 2,567.48 crore in FY 2019-20 and Tk 2,558.78 crore in FY 2018-19 and Tk 2,362.55 crore in FY 2017-18.
Alongside the Chattogram region, rubber trees, which consume a lot of carbon, are grown in Mymensingh, Tangail and Sherpur, according to the board.
Stakeholders in the rubber industry see a bright future for local rubber as a number of industries, particularly tyre makers, are using local rubber. “Future of the industry is bright as rubber is essential for automobile, tire, footwear and many other sectors,’ said
Md Fakhrul Islam, executive director (accounts and finance), at Gazi Tyre. He said more than 50 per cent of natural rubber is used for making any size of tyre.
Fakhrul said once the quality of local rubber was not good but now the quality of locally produce rubber reached the expected level.
Syeda Sarwar Jahan, chairman of the Bangladesh Rubber Board (BRB), said the locally produced rubber could meet 80 per cent of the local demand if the production cost could be lowered, taxes are reduced and it got proper marketing.
Apart from contributing to various industries, the rubber trees can also be used for timber, improving the land, and sinking carbon as it consumes a lot of carbon, she said.
Md Luthful Bari, a director of Meghna Innova Rubber Co Ltd, told The Business Post, “We always try to use our locally produced rubber for making tyres but in some cases, we use imported rubber. Now consumption of local rubber significantly increased for the growing automobile industry which needs a huge number of tyres.”
Meghna Innova Rubber Co Ltd also exports bicycle tyres and tubes.
Most of the manufacturers use local rubber for making by-cycle tyres and tubes which boosts the country’s rubber production, he added.
Problems faced by the local cultivators
A high rate of VAT on local rubber tempts the rubber cultivators to hide their actual production during the marketing and often sell their rubber to others for supplying to industries and export, said Syeda Sarwar Jahan, chairman of the BRB.
On the other, most of the businessmen in the rubber-based industry import synthetic and natural rubber as there is only a 5 per cent tariff on rubber import, she added.
“We are trying to bring stability in the rubber sector but we could not finalise anything because of negligence on the part of commerce and agriculture ministries,” she said. Syeda Sarwar also said the rubber cultivation area is bigger than the data they have as many small farmers are also cultivating rubber.
Mohammad Kamal Uddin, the immediate past president of the Bangladesh Rubber Garden Owners’ Association, said rubber is an essential raw material for many industries and its production and consumption are increasing every year.
He lamented that rubber cultivators are neither enlisted in the agriculture sector nor in the industrial sector and it was depriving them of getting bank loans which stands the way to expected progress.
At least 30 to 40 thousand people, including indigenous community members, are involved with gardening, processing and trading rubber, Kamal added.
