Frozen foodstuff exporters demand trim in corporate tax
Exporters of frozen foods, especially shrimp, have demanded that the federal government reduce corporate tax from 32.5 % to 15 % in the proposed national finances to help the sector get over a substantial fall in international product sales.
The demand for frozen shrimp and identical luxury foods has fallen drastically in western countries, Bangladesh's main export market, due to the ongoing novel coronavirus pandemic.
Not merely did this result in a decline found in shipments but also got international buyers, who were generally European, to either go back or cancel several consignments of frozen foods amounting to Tk 460 crore in value.
Traders have already been exploring Russia and China as potential export destinations in the last few years but the Covid-19 outbreak has laid waste to client demand in both countries.
In order to recoup their losses, exporters attemptedto borrow funds from the banking sector, using the returned consignments as collateral. Nevertheless, the financial institutions did not accept their proposal.
Besides, with international markets yet to reopen due to lockdowns targeted at curbing the pass on of coronavirus within their countries, there is uncertainty more than whether buyers will pick up their orders any time in the future.
Considering all these challenges and the lack of bank loans from the government's stimulus offer, both manufacturers and exporters appear to be at risk of an operating capital shortage.
Exporters declare that the demand for shrimp in international markets fell by around 30 % during the April-May period year-on-year while rates were reduced along the way as well.
Before the Covid-19 pandemic began, the purchase price for a kilogramme (kg) of shrimp was between $12.50 and $13. Nowadays it is right down to $10.50 or $11.0.
"However, it offers us hope that clients started to return the other day," said Shyamal Das, managing director of MU Seafood.
MU Seafood shipped three containers of shrimp in May.
"Exports are slowly returning to normal," he added.
During June, his peak period for product sales, Das ships up to 12 containers of shrimp. This is dThis June nevertheless Das can at most be prepared to ship seven containers as a result of 30 % fall in demand in western countries.
For the last five years, the full total value of his shipments ranged between Tk 101 crore and Tk 108 crore annually.
At this price, the company might be in a position to make a little more than one half of his usual export revenue at Tk 70 crore through shrimp and different fish by the end of the entire year, Das said.
In the same way, Md Jalal Uddin, director and ceo of Crimson Rosella Seafood, said when Italy was ravaged by Covid-19 earlier this year, exports to the European nation fell sharply.
"We are in need of bank support now. The banks are not featuring loans from the stimulus plans without collateral," Uddin explained, adding that since exports in this sector were on the rebound, exporters and makers need financial support to be able to grab the market possibly during this time of crisis.
"Through the March-April period, 90 % of our orders were cancelled," stated Md Rezaul Hoque, managing director of Current Seafood.
Generally, buyers asked for big discounts on previously shipped consignments or wished to go back the goods during that time.
Making matters more serious, farmers and exporters in Khulna and Satkhira have already been counting their losses following a damage due to cyclone Amphan amid the slump popular, Hoque said.
Commonly, Modern Seafood exports about Tk 320 crore-worth shrimp every year. This year nevertheless, the company will be happy if it creates half of that.
Modern Seafood has recently lost Tk 25 crore in order cancellations while the company's single seafood farm in Khulna was badly damaged by last month's cyclone.
"I am trying to revive my business by exporting smaller sized shrimp. I hope business returns on track soon as customers are now responding to my calls," Hoque advised The Daily Celebrity over phone.
The industry now requires government support to face the coronavirus fallout.
"Primarily, we wish a reduced amount of corporate tax from the proposed 32.5 per cent to 15 %," said Kazi Belayet Hossain, president of Bangladesh Frozen Foods Exporters Association.
Source tax also needs to be slashed from the proposed 0.50 per cent to 0.25 %, he added.
Hossain likewise asked the government to make securing disbursements from the stimulus program an easy process in order that exporters may cope with the low demand and even lower export.
In some cases, buyers repurchase the came back consignments but at discounted rates, Hossain said.
