Tax cut on raw material imports a must to boost bag industry

Despite having an attractive prospect for employment and export of bags, the country is yet to take the advantage due to high rate of tax on importing raw materials. The government sets high tax on raw materials, while imported readymade bags are available at cheaper prices. This is why the local manufactures are struggling to survive, Bangladesh Bag Manufacturers Merchant Association President Md Delowar Hossain Khan told The Business Post’s Abdur Razzak Sohel in an exclusive interview

How the bag business is going amid the ongoing inflation?

Each and every business in the country has severely affected by the ongoing economic crisis but still there is huge demand for bags. As it is the dull season for the bag industry sales are a bit low. This situation will improve very soon with the peak season in November. Generally, we witness a robust sale during the peak season. Gradually, the demand for bag is increasing significantly. We are hoping to sell a significant portion of bag as well in this coming season. The price of raw materials has increased by 20 percent due to worldwide inflation. The price of raw materials which was TK8000 earlier is now TK12000 at the local market. This raw material price hike has a negative impact on the price of bag at the market.

What prospect do you see for the bag industry of Bangladesh?

There is a huge prospect for the bag industry in Bangladesh as we have ample labor with low cost. On the other hand, bags are widely used while embarking on any trip or carrying anything anywhere – be it a school or be it an office. A changing lifestyle in accordance with the economic development has contributed to the rise of bag industry. A person uses many bags due to its easy-to-carry nature. This is why the demand for bags is increasing day by day and has made a big local market.

As a result, different industries have been developed in the capital as well as in villages. Currently, Bangladesh is meeting 70 percent of its local demand by manufacturing and the rest 30 percent is imported from China. The scenario was not the same a decade back. We can move forward with the industry if proper facilities are ensured.

What are the challenges you find inside the industry with your long experience?

An industry grows when it enjoys industry and academia collaboration. But there is a huge gap in the industry. There is hardly any educated person in the industry. The government is not focusing on the industry like other industries. Even, the government is yet to realize the prospect for the industry.

Bangladesh is highly dependent on China in importing raw materials while manufacturers have to pay nearly 90 percent taxes on importing raw materials. But the importers import readymade bags from China with the rate of nearly 30 percent of tax. It is not logical. This is why the local manufactures are struggling and cannot compete with the importers in term of price.

Besides, the local manufacturers are not importing raw materials following proper rules and regulations. This is why the government is failing to enjoy a significant portion of revenue. The government must set a reasonable tax considering the local industry.

On the other hand, we have to face challenge while finding skill labor for the industry. The educated people are not feeling encouraged to come to the industry. As a result, the industry is run by unskilled people. Here, we have to supply skilled manpower to manufacture export quality bags. The government should offer stimulus package for the industry like other industries to boost it.

Where the focus should be given to boost the industry in Bangladesh?

The main challenge for the industry is to collect raw materials at affordable price. Currently, we have to pay nearly 90 percent taxes on importing raw materials. On the other hand, the importers import readymade bags by paying nearly 30 percent taxes. This unfair tax system is hampering the growth of the industry.

Bangladesh is importing a significant portion of bags from China yearly. If the government reduces the tax we don’t need to import bags. Even, Bangladesh will export bags to the global market. We just need raw materials at affordable price. This will also generate employment for several lakhs of people while different local brands will be developed at the same time.