Bike exporters seek ‘meaningful’ incentives

The 4% cash incentive announced earlier this fiscal year for bicycle exports makes no sense, exporters said.

Their point is that the cash incentive excludes companies that use the bonded warehousing facility, unlike that enjoyed by exporters of bonded apparel and leather products.

Bonded warehousing is the facility for exporters to import raw materials duty free for export competitiveness.

The Association of Manufacturers and Exporters of Bicycles and Parts of Bangladesh, in its letter to the Finance Secretary, has already called for making the cash incentive available to bonded bicycle exporters and increasing it to 7% in the interest in diversifying exports and maintaining export momentum.

Bicycle exporters have also requested a corporate tax cut to 12%, in line with that of garment and leather goods exporters, from the current rate of 15%.

Not all members of the bicycle manufacturers’ association have bonded storage facilities.

Some 9 of the association’s 15 members have bonded warehouses, said the association’s general secretary, Md Luthful Bari.

“Neither bonded nor unbonded exporters find the incentive meaningful,” he said.

The 4% cash incentive, apparently applicable to non-bonded exporters, would not help them at all as they pay much higher tariffs on imports of raw materials and parts, he added.

For example, duties range from 10% to 45% for bicycle frames, forks, brakes, seatposts, paddles, chains, wheel hubs, and paint imports.

The motorcycle industry, on the other hand, pays tariffs of 1% to 10% on imports of their major raw materials and parts, including engine, transmission and gear parts, and raw materials for frame construction, while industry receives 10% cash incentives on exports.

The furniture industry, against its tariffs of 5 to 25% on raw materials, receives a cash incentive of 15%.

Exporters of plastic products pay 5% duty and get a 10% cash incentive, exporters of leather products pay 5-10% duty and get a 15% cash incentive, while ceramic product exporters pay 1-5% duty on raw material imports and get 10% cash incentive.

A cash incentive would help non-bonded bicycle exporters contribute to the export if they took advantage of a 15% cash incentive as an alternative to the bonded storage facility.

“The cash incentive, in fact, reduced the incentive to non-bonded bicycle exporters,” Bari told Business Standard.

Manufacturers and exporters of bicycle parts belong to the light engineering industry and they enjoyed 10% cash incentives which were later increased to 15%.

The incentive has helped increase the country’s bicycle parts exports.

But, the particular 4% cash incentive for the bicycle industry has proven to be contradictory and of course not a winning bid for parts exporters.

The association called on the government to continue to treat bicycle parts exporters as exporters of light engineering products and let them enjoy their previous 15% cash incentive. Otherwise, exports of bicycle parts would drop drastically, the association feared.

Bangladeshi bicycle manufacturers have become a major source of the European bicycle market, as they explore great opportunities in the American and African markets.

Meghna Group, Alita Bangladesh, RFL are some of the leading bicycle exports from Bangladesh.

Despite the lesser incentive, compared to other major export sectors, Bangladeshi bicycle exporters continue to thrive.

In the first eight months of the fiscal year (July-February), bicycle exports grew 21.29% year-on-year to $10.26 million, slightly below the Bureau’s strategic target export promotion for the period.

Bicycle exporters could have beaten the target, if they were treated on an equal footing with other booming export sectors, in terms of incentives for export competitiveness, Bari said.

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