Bangladesh: Shipbuilding likely to get 5-yr tax holiday facility

The government is set to declare a five-year tax-holiday benefit for the booming shipbuilding industry to transform the labour intensive sector into a major export earner, officials said Saturday. "We've decided in principle that the emerging shipbuilding sector should get tax-holiday facility. We will make recommendations so that the government can act fast," National Board of Revenue chairman Abdul Mazid told the FE.
Mazid is leading a high-powered body, which is working on details of the benefit. As per committee's recommendation, every shipbuilding company will obtain the tax exemption for five years from the date of its first export.
Shipbuilding industry has emerged as a booming export sector in a span of two years, grabbing orders to make 45 small ocean-going ships at a cost of US$600 million from top European and Singaporean buyers.
Leading exporter Abdullahel Bari Ananda Shipyard and Slipways Ltd hailed the government move saying tax holiday for ship makers will transform Bangladesh into a major shipbuilding hub, like that of ready-made garments.
"Even some unimportant export sectors get tax holiday benefit from the government. Why shouldn't the ship-builders, whose capacity for growth can only be matched with ready-made garments?" Bari, chairman of Ananda, said.
"A few of us are now in ship making business. But as soon as the government declares the tax-holiday benefit, dozens of entrepreneurs will invest in the sector.
"I know quite a few who have readied their investment and even bought land to build slipways and dockyards. It will create hundreds of thousands of jobs and make the sector a billion dollar industry," he said.
Bari's Meghnaghat-based Ananda has already grabbed export orders worth $400 million while Chittagong-based Western Marine received the rest $200 million.
Bari, however, said the sector needs more sops including "green channel" for buyers and bonded warehouse facilities from the government in an effort to cement its position in global export market.
Under a green-channel facility leading ship buyers can enter the country without hassles in the airport while bonded warehouse would allow the exporters to bring raw materials with deferred duty payment.
"Both tax-holiday benefit and green-channel facilities are crucial to the growth of the shipbuilding sector," new entrant into the sector Tofayel Kabir Khan of Khan Brothers said.
Khan Brothers is building one of the largest shipbuilding yards on the bank of the river Meghna and has already talked to major European shipping companies to lure orders.
The last caretaker government identified shipbuilding as a priority industry, following a series of export orders bagged by Ananda and Western Marine.
The Chief Adviser formed three top bodies to identify problems of the sector and how the government can address those to make it a major export earner and job creator.
Acting on his advice, the Bangladesh Bank has decided in principle to set up a Tk 5.0 billion refinancing fund for the ship builders.