FE Report

Furniture makers Monday urged the government to withdraw the proposal for increasing VAT on furniture products and at the same time recognise furniture production as a manufacturing sector instead of service sector.

Chairman of Bangladesh Furniture's Industries Owners Association (BAFIOA) KM Akhtaruzzaman said budget for the FY 2009-10 has proposed 15 per cent VAT replacing existing 4.5 per cent on the production of furniture items.

"This will have a negative impact on our sector, where more than two million skilled and un-skilled workforces are employed and earn their livelihoods," the BAFIOA chairman said.

He was speaking at a press conference organised by the BAFIOA to express their disappointment over the proposed budget at the national press club Monday.

The budget has also proposed 20 per cent supplementary duty and five per cent regulatory duty on raw materials, Mr Akhtaruzzaman said.

Increasing VAT will push the prices of furniture out of the reach of middle income families, the BAFIOA chairman said, mentioning that it would also discourage local entrepreneurs.

In such a situation foreign furnitures would be imported into the country ruining all the achievements the sector has scored so far, he added.

Moreover, additional supplementary duty on furniture raw materials would have abrupt impact on our forest, he said.

"Additional supplementary duty on import of raw materials would increase the cost of production, provoking traders to meet the demands for wood from local forestry sources. This would be very bad for our environment," he added.

All these will make the local furniture products less competitive in the global market now facing recession and would retard the potentials of export.