Import duty on raw sugar

Refining industries set up in Bangladesh with hard earned foreign exchange, investor funds and loans from financial institutions needs to be protected by duty advantage against finished sugar import. It has opened up a bright new prospect for local value addition in sugar manufacture. These refiners will enable us to reduce our dependence on import of refined sugar only; and can act as a useful catalyst for local processing for meeting the country's requirement of refined sugar. To support and encourage this new venture for meeting the long term needs of the country; it needs positive government encouragement and assistance to take off successfully in the overall national interest.

In the current budget, the government has unfortunately only encouraged import of refined sugar by removing the 43.75% duty ad valorem and replacing it by a specific duty of Tk 5, 000 per ton, irrespective of the import price. No such, encouraging duty structure has been provided to import raw sugar for the local sugar refining industries. By having the same duty structure (Tk. 5,000 per ton) both for refined and raw sugar import, the budget has, as a matter of fact, encouraged import only of refined sugar in preference to the scope for local value addition and employment generation inherent in the sugar refining facility that has been set up. One wonders why this step was taken by the Finance Ministry? Was it the pressure lobby of the sugar importers which took precedence over the entrepreneurs' need for sugar refining?

Needless to mention that for the import of raw and semi finished material for all other industries provision of preferential duty for raw and semi finished materials has been given all along. Why no such provision has been made for the import of the raw materials (raw sugar) for the local sugar refineries that have been installed? It may be mentioned here that to encourage the local cement industry there is a clear duty differential favouring the import of cement clinker for local processing as against import of finished cement.

In line with our cement industries the locally established sugar refineries also urgently need to be supported by having a favourable duty structure for raw sugar and it could be one tenth of the duty on finished sugar. Further, it would not be illogical to provide the sugar refining industry reasonable tax holiday for the gestation and rationalisation period of this new industry that has come up in Bangladesh.

It may be mentioned that to support local industries and encourage scope of local value addition various industries in Canada, Indonesia, South Korea and Japan allow separate and favourable duty structure for raw and semi finished materials. Under the circumstances, the 2006-07 budget should in the interest of encouraging locally established raw sugar refining in the country, have different duty structure for raw sugar. This is in line with the normal practice of encouraging local industries to establish themselves. One wonders why for this vital industry this principal was jettisoned?