Country's paint industry is worried of increased supplementary duties (SD), which threaten both revenue and the survival of manufacturers amid rising production costs and shrinking consumer demand, according to industry insiders.
The National Board of Revenue (NBR) last week raised the SD on the import of paint and varnish-related raw materials to 30 percent from 20 percent. Moreover, the SD on product supply was increased to 10 percent from the previous 5 percent.
The Bangladesh Paint Manufacturers' Association (BPMA), expressed concern over the tax increases and wrote to the revenue board on Sunday seeking a rate reduction.
BMPA argued that these duties, usually reserved for luxury goods, are unjustified for essential construction materials such as paints and primers, which are used to protect infrastructure from corrosion and erosion.
"Paint products are not luxury items," They are essential for the structural integrity of assets, from homes to large-scale infrastructure," he said, adding, "The increased taxes are compounding the financial hurdles manufacturers already face," said BMPA President Md Mohsin Habib Chowdhury, according to online version of a local media.
The sector's existing challenges include persistently high inflation, a weakening Taka against the US dollar, and stalled public constructions after the political changeover last year.
The size of the local paint manufacturing industry is around Tk 6,000 crore, and it can meet the domestic demand, according to the association. As many as 33 local brands manufacture paint items for the domestic market. It contributes to government revenue by generating over Tk 1,100 crore annually in VAT and taxes, according to the association. The industry also employs around 10 lakh people directly and indirectly.
According to an assessment by Berger Paints Bangladesh, per capita paint consumption in the country is 1.4 kg, lower than India's 3 kg. The annual consumption is 7-10 kg in ASEAN countries and 12 kg in China.
The assessment notes that about 85 percent of paints used in Bangladesh are manufactured locally, with the remainder relying on imports for specialised needs.
Kamruzzaman Kamal, marketing director at PRAN-RFL Group, which makes Rainbow Paints, said that while there is room for growth, higher taxes will discourage both consumers and businesses.
Md Jahidul Hasan, manager (purchasing and logistics) at Nippon Paint Bangladesh, said higher taxes on paints come at a time when the paint industry is already reeling from global and domestic economic shocks.
The devaluation of the local currency Taka against the US dollar has increased import costs for raw materials, while supply chain disruptions due to geopolitical tensions have further strained resources, he said.
