Tariff value hike on switch-socket metal parts demanded

Milton Ahmed: Local entrepreneurs demanded logical and realistic tariff values for importing metal parts used in switches and sockets production. In a written letter sent to the National Board of Revenue (NBR), the anticipated Bangladesh Electrical Electronics and Home Appliances Manufacturers and Exporters Association (BEEMEA) came up with the demand for the proposed budget of 2017-18.

The entrepreneurs, in the letter, said that the NBR has registered metal and plastic parts in the same category of HS code for which the tariff values for importing per kilogram metal parts as 'spare parts' has been fixed on the price of 2.5 USD, which is less than the actual price. However, the production of per kilogram metal parts made by brass and bronze sheet processing in the country costs 8 to 12 USD which led local entrepreneurs to huge loss, as import is more profitable than production.

In this situation, the local entrepreneurs said they would be able to compete in the market if the import of metal parts at the actual price is ensured through setting separate HS code. The move will also increase the government revenue.

The BEEMEA said that the metal parts of switches and sockets are made with brass sheet (a combination of copper and zinc) and brass rod and bronze sheet (a combination of copper and tin). According to the data, released on 5th March, by the London Metal Exchange (LME), the international market of metal supplies, the 'cash settlement price' for per kg copper, zinc and tin respectively were 5.59, 2.47 and 20.25 USD while additional premium and fabrication cost for per kilogram is 1 to 1.5 USD.

The price of FOB of brass and bronze sheets made from the combination of these components stands at around 5.42 and 9.01 USD respectively. After buying these components, local entrepreneurs are manufacturing various types of metal parts at their own factories, which are then used to produce switches and sockets. In this case, the land used to process the basic components of metal parts, machineries and their depreciation, appreciation of raw materials, labor wages, utility charges and various costs are also added for which the average production cost of per kg metal parts stands at 8 and 12 US dollars respectively.

However, in the current tariff and tax structure of HS code -8538.90.90, referred as 'switch-socket parts', the tariff value of each kg is fixed on the price of 2.5 USD. Using this opportunity, dishonest businessmen are paying the duty and taxes of imported metal parts of switch-sockets under the tariff value of 2.5 USD which is less than the actual price.

BEEMEA Secretary General Md. Sahabuddin said that the local industries have the capability of meeting the entire demand of switches and sockets in Bangladesh. However, the fast and significant development of this sector is facing big obstacle for the existing duty and tax policy of switch-socket parts. As a result, unscrupulous businessmen get the opportunity to dodge revenue through under invoicing. He believes that the government is being deprived of significant amount of revenue.

The secretary general also said the products manufactured in the local factories are lagging behind in the price competitiveness of the switch-socket market to various metal parts imported through tax evasion, threating the huge investment of local entrepreneurs in this sector.


risingbd/Dhaka/Jun 8, 2017/Milton Ahmed/Nasim