
The steep 200 per cent hike in customs duty on the import of malt extract — used for food preparations for infants and children — would allegedly provide a competitive advantage for importers, affecting local producers.
The hike in the customs duty would also discourage both existing and future Foreign Direct Investments related to establishing any local industry, according to industry insiders.
In the proposed budget for the financial year 2025-26, the interim government raised the customs duty to 15 per cent for the bulk import of malt extract or food preparations for infants and children.
The existing customs duty on malt extract or infant milk ingredients is 5 per cent paid by Industrial IRC Holders and VAT-compliant food processing industries. Â
According to the industry insiders, the market size of infant and children milk is about 10,000 tonnes annually.
Among them, the importers import 10 per cent as finished products, where another 90 per cent is being imported as industrial raw materials (bulk) and being processed and packed inside the country.
They also said that an imposition of another 10 per cent customs duty would vulnerable the whole processing and packing sector which holds the lion portion of the total market.
Debabrata Roy Chowdhury, director, legal, RSA, corporate affairs and company secretary, Nestle Bangladesh PLC, told ¶¶Òõ¾«Æ· that Bangladesh is classified as a high-risk country due to alarming child mortality rates.
Infant baby food has been considered as an essential commodity under the ‘Essential Commodities Act’, he added.
He also stated that the drastic 200 per cent increase in customs duty on raw materials undermined efforts to keep these products affordable.
‘It contradicted the finance adviser’s budget speech, which called for reduced tariffs on essential goods and raw materials,’ he added.
He feared that if the duties were not reinstated to their original levels, this steep hike would be escalated, endangering thousands of children’s lives and potentially increasing mortality rates as families turn to cheaper, unsuitable substitutes like full cream milk powder or cow’s milk.
Moreover, the impact of this duty increase is expected to sharply reduce consumption, which may ultimately result in a decrease in overall government revenue from customs duties, VAT, and income taxes.
It would also have an adverse impact on employment across the entire value chain.
Industry insiders urged the National Board of Revenue to reinstate the 5 per cent customs duty on the import of malt extract, used for food preparations for infants and children.
Talking to ¶¶Òõ¾«Æ·, Md Asadur Rahman, deputy general manager – operations of Vitalac Dairy & Food Industries Ltd, another importer of infant milk ingredients, said that the government didn’t explain any logic against the hike in the customs duty.
‘It will adversely affect the lower income and working women of the country. If the government raised the duty to encourage breast-feeding, it also contradictory as women use formula milk due to lack of breast-feeding,’ he added.
Earlier, recently, the Infant and Young Child Nutrition Association in Bangladesh, an organization of the traders who produce and distribute infant milk and baby foods for the Bangladeshi consumers, issued a letter to the NBR Chairman Abdur Rahman Khan urging reinstate the original customs duty of 5 per cent.
In the letter, they stated that although breastfeeding is vital, 40 per cent of children in Bangladesh depend on infant or baby milk.
Raising customs duty would increase the retail prices of infant or baby milk, and low-income families might turn to unsafe alternatives or unregulated products, which could impact baby nutrition, the letter stated.
The letter also stated that the hike in prices may adversely affect the working women’s affordability, and might even jeopardise their employment continuity.
Due to a rise in customs duty, the industry might shift from food processing to importing finished goods, leaving no option but to implement job cuts.