Plastic industry policy finalised with 10-yr income tax holiday for entrepreneurs

The Plastic Industry Development Policy 2023 has been finalised with a provision for a 10-year income tax holiday to entrepreneurs in plastic parks and disadvantaged areas.

The policy was finalised in June this year based on stakeholder feedback, nearly two years after a draft was released in 2021. 

This five-year policy, formulated by the Ministry of Industries, will be implemented by 2028.

Nine strategies have been defined in this plan with emphasis on increasing local industries, building capacity, increasing access to international markets, and skill development for the sustainable development of the sector. 

The policy aims to ensure adequate financial support for domestic industries by providing loans to the small and medium enterprises in the plastic sector at 3% interest from a special fund. 

This will be implemented through the SME Foundation.

Besides, the industry will get duty exemption on imported capital equipment, spare parts or accessories, tax credit on glass materials and supplies.

The policy also states that necessary tax concessions will also be provided for the basic infrastructure development work required by the industry.

In addition, the government will provide VAT reduction and bonded warehouse facilities to the plastics industry in purchasing local goods and services including telecommunications, electricity, utilities.

Lauding the policy, Samim Ahmed, president of Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA), told The Business Standard, "Incentives assured in the policy will help in the development of this industry."

He added, "Now, the emphasis should be on implementation of the policy." 

Bangladesh Small and Cottage Industries Corporation is building a plastic industrial park in Munshiganj to bring all scattered factories under one umbrella.

The land filling of an industrial park has been completed. The construction of the factory will soon begin by allotting plots among the entrepreneurs.

Targets to market expansion

At present, the market of Bangladeshi plastics is about $2.99 billion. Of which, 83.4% is domestic and the remaining 16.6% is international.

In the new policy, an annual growth target of 15% has been set for the plastic industry. 

It also targets to expand the market to $10 billion, increase the contribution of the industry to the GDP by at least 2%, train 10,000 skilled people, and create five lakh new employment by 2028.

Furthermore, the policy aims to expand the market to $20 billion, and be recognised as a "zero waste nation" by 2030.

Currently, the per capita consumption of plastic products in the country is around 5kg-7kg, while the global average per capita consumption of plastic products is around 50kg.

BPGMEA President Samim Ahmed said the sector has seen good growth in the last few years. 

"Given the necessary policy support, market expansion targets can be achieved," he added. 

Bangladesh's plastic export 

In FY23, Bangladesh's plastic and plastic product export was 4.21% short of target, but increased by 6.67% compared to the previous fiscal.

Exports of plastic products in FY23 increased by 26.23% to $20.98 crore against the previous year's $16.62 crore.

Samim Ahmed said that despite the Russia-Ukraine war and the pandemic, there is a continuous growth in the export of plastic industry products. 

"Due to the demand for plastic products in the global market, this export is increasing. There are more export opportunities in this sector in future," the industry leader added.

Global plastic use 

According to Grand View Research, the global plastic market was valued at $609.01 billion in 2022 and is expected to grow to $721.14 billion by 2025.

Bangladesh occupies only 0.6% of the global plastic market. 

The US has the highest 109kg per capita use of plastic, followed by China at 38 kg, India at 11kg. 

The Plastics Development Policy 2023 states that despite the enormous potential of the plastics industry, there is a lack of concrete action and strategic direction to address the existing constraints. 

Also, there is a lack of quality control testing facilities, innovative technologies, proper management of plastic waste, business friendly tax and customs facilities etc.