Budget
I would like to hail the government for proposing an industry-friendly budget for the 2008-09 fiscal year. At the same time there are some factors that need reconsideration. A reduction of two per cent customs duty has been proposed on capital machinery from the current five per cent. Three per cent reduction on raw materials and semi processed raw materials has also been proposed from the existing ten and fifteen per cent respectively. On cotton import, the zero duty structure will be continued to facilitate low cost of cotton yarn production.
In today's world it is estimated that half the total yarn is produced from natural fibre like cotton, rayon & linen. One-quarter of yarn is produced mixing natural fibre and man-made fibre that originates from petrochemical. One-quarter of yarn is produced from man-made fibre. Draw Texturising Yarn (DTY), popularly called polyester yarn, is made from man made fibre, that is, from petrochemical. DTY is produced from partially oriented yarn ( POY ), which is imported from abroad. On the basis of the proposed budget, for importing POY the duty structure is 31 per cent (12 per cent customs duty, 15 per cent VAT, One per cent PSI and Three per cent AIT ). But in case of cotton it is zero. Owing to increase in oil prices recently, in the international market the price of POY has been doubled and it will increase further. With the proposed import duty structure it is not financially feasible to produce DTY in Bangladesh. Already three factories that used to produce DTY importing POY have been closed. The workers & other employees have lost jobs. Owners of the factories concerned are confronting problems in repaying bank loans.
Only if the government imposes the same duty structure on POY import, like cotton import, those factories can resume production. The government should reconsider the matter.
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