Despite having huge potential, high duty on importing raw materials is hindering the growth and export of eco-friendly paper cup manufacturing sector of the country.
Though most of the countries realise 5-10 percent duty on the import of raw materials for paper cups, Bangladeshi entrepreneurs said they have to pay 25 percent customs duty which ultimately reaches 61 percent including AIT, VAT, custom and port charges.
While the world is embracing the green revolution in the wake of global warming, plastic cups are flooding the markets to meet the huge demand of cups across the country. Even, some traders are importing low-quality paper cup to meet the additional demand, affecting the local industry.
In order to safeguard the sector, the industry entrepreneurs have been demanding to lower the duty and submitted a proposal to National Board of Revenue (NBR) in this regard.
Sources at NBR said that they have received a letter requesting to set the duty at an affordable level to help the paper cup industry flourish. “The NBR is considering the matter,” said the sources.
It has been learnt that the entrepreneurs have to import raw materials and most countries provide incentives and realise less than five percent duty on import the raw materials for paper cups so that it can take the place of plastic products in the market.
Even, some countries provide duty-free facilities for the paper cup manufacturing sector.
Sectors insiders said the European countries, USA and India provide duty-free facilities to the paper cup manufacturers, Middle East countries realise 5 percent duty and Nepal charge 7 percent while Bangladesh government is realising 61 percent. As a result, high production cost has been pushing the entrepreneurs into a stiff competition while some entrepreneurs had to stop manufacturing paper cups.
Entrepreneurs said if the government lowers the high duty, the economy will ultimately get benefited. The production and use of paper cup will increase manifolds to help the government earn huge revenue from this sector.
They also said this environment-friendly product has huge export potential. If the government provides cash incentives and lowers the duty, they will be able to export their paper cups to the European and USA market.
Kazi Sazedur Rahman, proprietor of KPC industry, said high duty and lack of skilled manpower are the key factors affecting the growth of this promising sector.
“Due to the 61 percent duty on raw materials import, we are facing tough competition with the plastic products which is totally environment unfriendly. As the duty is high, the price is also high and the neighbouring countries are taking advantage of it,” said Sazedur, who was awarded the Small Entrepreneur of the Year-2016.
“The government should withdraw the duty for the sake of the environment and help this thriving sector flourish,” he said, adding that they have already met
Finance Minister AMA Muhith in this regard and the minister assured of looking into the matter. Analysing the market, it was found that the demand of one-time cup and plate has increased manifold. But plastic products are occupying the major portion of the market for its cheap price.
Due to high import duty, a paper cup costs TK 1.50 per piece where a similar size of plastic costs only 90 paisa at the retail level.
“The price of paper cups could be reduced further and it could be made more popular among the consumers if the authorities lower the import duty,” said Sazedur.