From Our Correspondent, Chattogram: The government has extended the Value Added Tax (VAT) exemption on ocean-going ship imports for two more years to support maritime trade and expand the national-flagged fleet. However, a sudden reduction in the maximum allowable ship age from 25 years to 10 years, alongside increasing the mandatory operational period under the Bangladesh flag from 3 to 5 years, has triggered deep concerns across the shipping sector. While the official aim is to foster a modern, eco-friendly fleet, maritime professionals and shipowners caution that these stringent conditions overlook local financial realities and could shrink the domestic fleet.
According to the revised statutory regulatory order issued by the Internal Resources Division of the Ministry of Finance, the VAT exemption remains effective until June 30, 2028, for vessels with a minimum capacity of 5,000 deadweight tonnage (DWT). To qualify, imported vessels must be no older than 10 years and must operate under the Bangladeshi flag for at least 5 years, tightening the previous thresholds of 25 years and 3 years respectively.
Industry leaders, master mariners, and maritime analysts are urging the authorities to reconsider the decision. They point out that Bangladesh’s private shipping sector lacks the capital depth to purchase younger or brand-new vessels en masse, given the multi-million-dollar price gap between well-maintained 15-to-25-year-old vessels and those under a decade old. Imposing a 10-year limit creates a prohibitive entry barrier that risks pushing medium and emerging entrepreneurs out of the market, effectively concentrating ownership within a few large conglomerates.
Stakeholders also warn of adverse macroeconomic impacts. If import volumes drop drastically due to capital constraints, projected revenue gains will falter alongside a heavier blow to foreign exchange reserves. A robust domestic fleet retains vital freight earnings within the country, whereas a shortage of local vessels will force heavy reliance on foreign liners, resulting in billions of dollars draining abroad in freight and charter charges.
Maritime experts emphasize that age alone does not determine seaworthiness. Vessels complying with recognized classification society standards, proper maintenance, and International Maritime Organization (IMO) safety rules routinely operate safely and profitably for 30 to 35 years. They argue eligibility should balance age with structural condition, classification records, port state control performance, and safety management systems.
Given the sector’s extensive backward linkages—including seafarer employment, ship management, drydocking, marine repairs, banking, and insurance—stakeholders propose forming an independent advisory committee of marine engineers, naval architects, master mariners, and economists to conduct an objective impact assessment. They recommend a phased transition over 10 to 15 years, gradual lowering of age thresholds, and exemptions for vessels with proven safety track records, urging the National Board of Revenue, the Department of Shipping, and shipowners to collaborate on a pragmatic revision.
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