SD hike to affect growth of local automobile assembling industry

Dhaka,  Sun,  23 July 2017
Published : 16 Jun 2017, 22:19:39
printer

SD hike to affect growth of local automobile assembling industry

Hybrid technology is expensive and the relaxation of tax would only help to market the luxurious cars in comparatively less price in Bangladesh but it will not benefit the middle class or high middle class families. It is apprehended that this imbalance in taxation between hybrid and non-hybrid cars will increase unhealthy competition in the sector
FE Desk


The hike of supplementary duty (SD) on completely knocked down (CKD) items in the proposed budget will hinder the progress of local assembly industry.

In the proposed budget, duty for CKD vehicle has been fixed at 148.30 per cent from existing 104 per cent duty.

"The 48 per cent rise in duty and difference of 64 per cent in tariff between CBU and CKD would lower the growth investment opportunities in this sector as local companies would lose their interest for car assembly by installing own plant. Some of the local companies have already invested at large scale through importing machineries and installing factory as well as developing human resource under technology transfer," a statement issued by a group of car assemblers said.

Country's road condition, GDP growth, development project and people's purchasing capacity reflect that demand of middle-sized suburban utility vehicle (SUV) is on top, both for government and personal uses. An importer has to pay nearly 212 per cent duty to import such type of vehicle in CBU condition.

The same condition is applicable to 2000 CC-3000 CC segment CKD cars, as 285 per cent tariff has been fixed for it by increasing nearly 135 per cent tariff.

At present, Progati Industries, a state-owned entity is assembling sports utility vehicle at its own assembling plant to meet government's demand and offers affordability for private sector as well. The company sells over 500 sports utility vehicle annually and many more units when combined production.

It is apparent that continuation of the previous 150 per cent tariff combined with further reduction of the tax further as an incentive will accelerate development of local industry.

The government has launched mega projects such the Padma Multipurpose Bridge, Metrorail where double-cabin pickups are needed to carry necessary equipment and goods. Moreover law enforcing agencies and other government organization also use the pickup. But tariff for this pickup, which is not a luxurious product has been increased by 62% to set it 212% for CBU double-cabin pickup ranging between 2001 CC to 3000 CC in the proposed budget.

"The hiked tariff would push the government expenditure of project implementation," the statement added.

On the other hand, import of hybrid car has been encouraged in the proposed budget by reducing tariff to lessen environment pollution and fuel cost.

"But, our infrastructural and other related facilities are not considered for using the hybrid car. Our market is yet to ready for the new technology and the option for hybrid car actually will not bring any fruitful result for the commoners," the statement mentioned.

Hybrid technology is expensive and the relaxation of tax would only help to market the luxurious cars in comparatively less price in Bangladesh but it will not benefit the middle class or high middle class families. It is apprehended that this imbalance in taxation between hybrid and non-hybrid cars will increase unhealthy competition in the sector.
ADDRESS
Editor : A.H.M Moazzem Hossain
Published by the Editor for International Publications Limited from Tropicana Tower (4th floor), 45, Topkhana Road, GPO Box : 2526 Dhaka- 1000 and printed by him from City Publishing House Ltd., 1 RK Mission Road, Dhaka-1000.
Telephone : PABX : 9553550 (Hunting), 9513814, 7172017 and 7172012 Fax : 880-2-9567049
Email : editor@thefinancialexpress-bd.com, fexpress68@gmail.com
Copyright © 2017. All rights reserved
Powered by : orangebdlogo
close