DCCI raises alarms over VAT and gas price hikes

The Dhaka Chamber of Commerce & Industry (DCCI) has raised serious concerns over proposed hikes in industrial gas prices and VAT, warning they could disrupt business, deter investment, and undermine export competitiveness.

Petrobangla recently submitted a proposal to the Bangladesh Energy Regulatory Commission (BERC) to more than double the per-unit price of gas for industrial and captive consumers—from Tk30 and Tk31.50 to Tk75.72.

The move aims to alleviate the government's subsidy burden on gas production costs. Simultaneously, the National Board of Revenue (NBR) has raised income tax for motorcycle, refrigerator, air-conditioner, and compressor manufacturers from 10% to 20%, reversing a prior commitment to maintain reduced rates until 2032.

In a statement, the DCCI highlighted that such measures, if implemented, would significantly increase production costs, placing inflationary pressure on both industries and consumers.

This, the DCCI cautioned, could deter local and foreign investment, jeopardise Bangladesh's competitive standing in the global market, and hinder the establishment of new industries.

"The proposal to increase gas prices without ensuring uninterrupted supply presents a formidable challenge for businesses," the DCCI said. "The cost of doing business will skyrocket, impacting both domestic and export-oriented industries. This would not only reduce profitability but also erode Bangladesh's competitiveness in international markets."

The chamber said that the negative implications of inconsistent policies. The abrupt withdrawal of promised tax incentives, it argued, could tarnish Bangladesh's reputation as an investment-friendly destination.

"Such a reversal sends a detrimental message to both local and foreign investors, undermining confidence and casting doubt on policy reliability," the statement added.

A Call for Collaboration

The DCCI urged the government, BERC, and Petrobangla to reconsider the proposed gas price hike. It also called for a review of the VAT and tax rate increases, suggesting that these measures could exacerbate inflationary pressures and operational costs for businesses at a time of global economic uncertainty.

"To foster sustainable economic growth, it is imperative to maintain a stable, business-friendly environment," the DCCI noted. "This requires long-term policy commitments, tax benefits, and active collaboration between the government, private sector, and other stakeholders."

Broader Implications

The proposed tax hike on manufacturing industries such as motorcycles, refrigerators, and air-conditioners comes at a time when businesses are already grappling with an unstable economic climate.

The DCCI warned that these measures could dampen local industrial activity, reduce foreign investment, and ultimately curtail economic recovery.

With Bangladesh striving to recover amid global economic challenges, the DCCI reiterated the need for "cost-effective policies that ensure continuity and stability."

It argued that policy reversals and steep cost increases could undermine the country's efforts to attract investors and sustain economic momentum.