Bicycle exports fall

Fire at a bicycle factory has significantly affected Bangladesh's bicycle exports in the first four months of the current fiscal year.

Exports fell nearly 31 percent in July-October of 2015-16, compared to the same period last fiscal year, according to Export Promotion Bureau.

Bangladesh exported bicycles worth more than $126 million in 2014-15; the export target for the current year was set at $132 million.

The strategic target for the first four months was accordingly determined at $41.46 million, but the actual export figure was less than $30 million.

“Production is totally suspended in one of our factories that burned down around six months ago. This has impacted the country's overall bicycle exports,” said Lutful Bari, director of operations at Meghna Group.

Meghna Group is the market leader in bicycle exports with a number of factories, including the Transworld Bicycle Factory that was burnt down on May 2 this year.

Transworld had set a target to export 150,000 pieces of bicycles this year, against its export of 135,000 pieces worth more than $17 million last year. Till May, the company exported 54,000 bicycles, mostly to renowned companies in Europe.

“As soon as we get clearance from the Customs Bond Commissionerate, we will construct a new building and start production,” Bari said.

The fire at Transworld destroyed imported goods worth Tk 25 crore brought under a duty-free facility to produce and export bicycles.

In line with tax rules, export-oriented industries have to pay taxes during the import of raw materials, if they work in a normal tax regime. After exporting their finished goods, they have to claim a duty drawback from the government. But under the special tax regime like the bond system, exporters do not need to pay tax for the import of raw materials.

Bangladesh Bank has already extended the tenure of its export development fund (low-cost financing for exporters) for Transworld by one year, soon after the company informed the central bank about the fire, said Mizanur Rahman, chairman of Meghna Group.

Transworld also got clearance from its insurer in August, he added.

Alita Bangladesh in Chittagong Export Processing Zone and Fire Fox in the port city also export bicycles.

According to data available in the Customs Bond Commissio-nerate in Dhaka, the licensees were given a tax benefit under a bond facility worth Tk 15,223 crore in 2008-09, Tk 20,277 crore in 2009-10 and Tk 25,072 crore in 2010-11 (till April).

Had the bond facility not been prevalent, exporters would have to pay these amounts of taxes for imports of raw materials.

There are about 6,000 fully export-oriented industrial units under the Customs Bond Commissionerate in Dhaka that get bonded warehouse facility.