The government’s proposal to double import duties on PVC and PET resin would raise costs across multiple industries, as plastic manufacturers warn that Bangladesh’s heavy reliance on imported raw materials will transmit the tariff increase into construction, packaging and pharmaceutical supply chains.
The proposed budget would increase customs duty on polyvinyl chloride (PVC) resin and polyethylene terephthalate (PET) resin from 5 per cent to 10 per cent. It also proposes similar increases for film grade PET resin, PVC sheets and pharmaceutical-grade aluminium foil used in medicine packaging.
PVC and PET resin are core petrochemical inputs used to manufacture products including water pipes, beverage bottles, food packaging materials and pharmaceutical packaging.
Manufacturers argue the tariff increase is intended to support domestic resin production for backward linkage strengthening. But local resin capacity remains insufficient to substitute imports at scale.
Bangladesh consumes about 5 lakh tonnes of PVC resin and 3.5 lakh tonnes of PET resin annually, according to the Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA), while domestic production capacity stands at about 1.5 lakh tonnes and 100,000 tonnes respectively, leaving around 70 per cent of demand dependent on imports.
“The customs duty itself will double from 5 per cent to 10 per cent. Once advance income tax and other charges are added, the effective tax burden on the key raw material of the plastic industry can reach around 30 to 32 per cent,” BPGMEA President Shamim Ahmed told TIMES of Bangladesh.
The higher duty load would compress margins, raise production costs and affect thousands of businesses dependent on imported inputs.
“There are only two or three domestic producers, and together they meet only around one-fifth of demand. Even then, there are quality and cost concerns. Imports remain essential,” he said.
The plastic industry supplies intermediate materials to construction, food and beverage, pharmaceuticals, electrical and electronics, automotive, agriculture and consumer goods sectors, meaning higher input costs are expected to cascade through multiple downstream industries.
BPGMEA Senior Vice-President KM Iqbal Hossain said the tariff increase would raise overall working capital requirements for manufacturers by about 7.5 to 8 per cent.
“Most manufacturers depend on bank financing. Higher investment means higher borrowing costs, which will ultimately be passed on to consumers,” he said.
Construction would be particularly exposed, as PVC pipes are widely used in water systems and infrastructure projects.
“If raw material costs rise, prices of pipes, water lines and many other products will increase.”
Industry stakeholders also questioned the extent to which domestic producers can replace imports.
Hossain said manufacturers of high-specification products continue to rely on imported resin due to quality and consistency advantages.
“Companies producing premium-grade pipes often use imported raw materials because overseas suppliers have decades of experience. Local producers are still at an early stage,” he said.
He added that domestic producers generally price in line with global markets, limiting the likelihood that higher tariffs would reduce end-user prices.
The proposed increase on film grade PET resin is expected to raise costs in BOPET film production used in food, beverage and agricultural packaging, while higher duties on pharmaceutical-grade aluminium foil are likely to increase medicine packaging costs.
Global volatility has already affected prices.
Ahmed said international resin prices surged from around $900 per tonne to $1,500–1,600 this year due to the tensions around the Strait of Hormuz before the recent easing.
The impact is already visible domestically.
“Resin that previously sold for Tk3,200 to Tk3,500 per 25 kg bag recently reached around Tk5,200,” Hossain said.
“For a 100 ml pharmaceutical bottle, raw material cost alone has increased by more than Tk1. A bottle we previously supplied for Tk4 now costs around Tk5.10.”
He said exporters are partially protected through bonded warehouse facilities and duty drawback schemes, though delays in tax refunds continue to strain cash flow.
Despite opposing the tariff increase, BPGMEA welcomed several other budget measures, including retention of supplementary duty on imported finished plastic goods, continuation of VAT exemptions on recycled products and reductions in withholding tax on recycling waste and export incentives.
The association has urged the National Board of Revenue to retain the existing 5 per cent duty on PVC and PET resin, arguing that the increase would raise plastic goods production costs, weaken competitiveness and add pressure on consumption and investment.
