Food importers urge BB to suspend interest on loans

The country's foodstuff importers and suppliers have urged the central bank to suspend the interest on bank loans availed by the businesses that currently reside under the sector.

Bangladesh Foodstuff Importers and Suppliers Association (Bafisa), in a letter to the Bangladesh Bank, have asked for the waiver until this December to help them offset their losses and survive during the ongoing Covid-19 pandemic.

The association has also asked the central bank not to classify existing loans from these traders until December 2021. 

Bafisa also forwarded the letter to the Prime Minister's Office, finance and commerce ministries, the National Board of Revenue (NBR), and the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI).

The pandemic severely disrupted the sector in terms of cash flow and the financial capacity of both importers and suppliers have been dipping since February last year, said Golam Nabi, president of Bafisa. 

Initially, many assumed that the pandemic would become ineffective within six months. But it has been almost one-and-a-half years now with no signs of the world getting rid of Covid-19 soon, he added. 

According to Nabi, the sector faces diverse problems, including periodic payment of value-added tax (VAT) and other taxes, along with different restraints induced by the pandemic.

"Food importers have to pay the highest import duties compared to other sectors, having a total-tax-incidence [TTI] ranging from a minimum of 150%-200% on various products. At the same time, we are subjected to corporate tax at the rate of 37%," said Nabi. 

As a result, the sector's businesses are having issues in paying loan instalments, including interest. 

Additionally, revenue targets set by the NBR and the current incentives provided to officers at the field level have added pressure on the businesses of the sector, said the BAFISA president.

DCCI President Rizwan Rahman said the increasing revenue target each year is churned from a fixed number of taxpayers. 

“The focus should be on widening the tax net and collecting officers should be incentivized on that, not on revenue collection that induces harassment to the businesses facing disruptions because of the pandemic,” he said. 

He suggested that the NBR remove the discretion of field-level VAT officials among the ranks of deputy commissioners or deputy directors and the automation of income tax and VAT departments.

Bafisa has asked for a waiver of interest on the loans, which were regular in payment until January 2020.

Some 115 traders and importers are registered with Bafisa, which was founded in 2019 to promote import opportunities and cooperation between importers and suppliers in the country.