The Dhaka Chamber of Commerce & Industry (DCCI) has voiced deep concern over the negative impacts of a proposed increase in value-added tax (VAT) and industrial gas prices, warning of far-reaching consequences for the country’s economy and investment climate.
In a statement issued on Thursday, DCCI expressed disappointment over Petrobangla’s recent proposal to the Bangladesh Energy Regulatory Commission (BERC) to more than double the price of gas for industrial and captive consumers.
The proposed increase would raise prices from Tk 30 and Tk 31.50 per unit to Tk 75.72, aiming to reduce the government’s subsidy burden on gas production.
Additionally, the National Board of Revenue (NBR) has decided to double the income tax rate for industries such as motorcycles, refrigerators, air conditioners, and compressors, increasing it from 10% to 20%.
“If the proposed price hikes are implemented, the cost of production will rise significantly, exerting inflationary pressure on the economy,” the DCCI said.
“It is essential to ensure a stable and investment-friendly environment by maintaining long-term tax benefits and demonstrating a commitment to policy continuity to promote sustainable economic growth.”
The chamber warned that the gas price hike, especially without ensuring uninterrupted supply, poses a significant challenge to the industrial sector, as it will increase the cost of doing business exponentially.
DCCI highlighted that the proposed hikes could adversely affect the investment climate, discourage the establishment of new industries, and disrupt the operations of existing ones. Export-oriented industries, in particular, would face higher production costs, potentially weakening Bangladesh’s competitiveness in the global market.
“In the current unstable economic environment, these measures will create additional challenges for businesses, reducing their global competitiveness and discouraging both local and foreign investments,” the statement read.
The chamber further criticized the decision to increase taxes on key manufacturing sectors such as motorcycles, refrigerators, air conditioners, and compressors. This move contradicts earlier promises of tax benefits in these sectors until 2032.
“Retracting this promise midway sends a detrimental message to investors about the government’s policy consistency,” the DCCI warned. “Such a move will severely impact foreign investments and create uncertainty for local investors.”
DCCI called on BERC and Petrobangla to reconsider the gas price hike proposal in light of the ongoing economic recovery amid global instability. It also urged the government to reassess the VAT and tax increases to alleviate pressures on businesses and curb inflation.
“Joint initiatives by the government, private sector, and other stakeholders are necessary to overcome existing economic challenges and foster a cost-effective, business-friendly environment in the country,” the chamber concluded.
