The Bangladesh government wants to attract local entrepreneurs to the container business

The government has proposed reducing the overall tax burden on all types of containers to create opportunities for local entrepreneurs looking to save billions of dollars each year.

During the budget speech, Finance Minister AHM Mustafa Kamal said, “In order to create domestic entrepreneurs in this sector, I propose to reduce the total tax burden for all types of containers, with the duty rate for both types of containers being 15%.” in both cases 20%.”

According to the National Revenue Board (NBR), although Bangladesh-flagged vessels operate in international waters, the container business is 100% controlled by foreign companies.

About 30 to 35 lakh containers are used to move import-export goods every year, they said. Traders rent these containers for between $100 and $150, depending on the destination.

Due to the high tariffs, however, the import of containers is almost zero, it said.

An NBR official said a local contractor recently sent a letter to the tax authorities to raise awareness of the problem and consider duty-free arrangements for container imports.

The official hoped this policy would help boost investment in the container business.

Speaking to several businessmen involved in the shipping business, it was learned that there are domestic clothing companies that cannot clear the goods out of the port on time.

This means that an additional amount of demurrage has to be paid. Everything must be paid in dollars.

If the dealers have additional containers or can transport these products in a container rented from a domestic company, these additional fees do not need to be paid.

Given that, exempting container imports from duties will save the country money, they said.

Seagoing ship shows the way

Thanks to the government’s political support and the tax exemption of foreign currency earnings from the outgoing 2022/23 financial year, local entrepreneurs who have invested in expanding their capacities in the maritime sector now have a deadweight tonnage of almost 31,000 tons with a total capacity of almost 31,000 tons 95 of the flagged ships, industry insiders said.

Leading industrial conglomerate Meghna Group of Industries (MGI) added four brand new bulk carriers to its fleet of seagoing vessels in February this year.

With the 22 vessels, MGI’s total cargo capacity reached 12.20 lakh tons, securing MGI the top position in seagoing vessel operations in the country, surpassing long-time leader KSRM Group.

KSRM currently has a total of 23 ocean-going vessels in its fleet, but their total cargo capacity is 11.77 lakh tons.

In FY23, the government offered a tax exemption on foreign currency earnings from Bangladesh-flagged vessels from the coming fiscal year to earn US$3-4 billion a year. Previously, such ships had to pay a 10% tax on their earnings.

According to the NBR, this tax break will remain in place until 2030, when the ships’ foreign exchange earnings are brought into the country through bank channels.

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