Newspaper Owners' Association of Bangladesh (Noab), Bangladesh Sangbadpatra Parishad (BSP) and journalist union leaders yesterday demanded that the government exempt or reduce the tax on imported newsprint to a maximum five percent and increase the rate of government advertisements.

As the price of newsprint on the international market is consistently increasing, the existing 25 percent tax on imported newsprint will hit the country's newspaper industry, said the Noab, BSP and journalist union leaders at a meeting held at the National Press Club.

Motiur Rahman, editor of the daily Prothom Alo, in his paper on the country's existing newspaper industry, said currently import of newsprint costs Tk 59,500 per ton.

On the international market the cost per ton of newsprint ranges between $580-590 while in the domestic market the cost of locally produced newsprint stands at $665 although the quality is very low compared to imported newsprint, Motiur Rahman mentioned in the paper.

He also pointed out that the country's newspaper industry has to meet its needs by importing 75 percent newsprint but the local newsprint industry cannot even ensure proper supply of the rest 25 percent.

Noting that two years ago imported newsprint used to cost Tk 41,000 per ton, the Prothom Alo editor feared the price is likely to jump up by the end of this year due to the price hike of newsprint in the international market.

He cited the examples of India and Pakistan where the tax on imported newsprint is five and six percent respectively.

Considering the rate of Tk 208 per column-inch for the government advertisements very low, he demanded increasing the rate at least to Tk 500.

Speaking at the meeting, Barrister Mainul Hosein, president of the BSP and the editorial board of the daily Ittefaq, said the country's newspaper industry will face a grim future if the tax on newsprint import is not reduced.

"We have no interest in importing newsprint from abroad and rather want the country's newsprint industry to flourish. But the quality of locally produced newsprint must be good," the BSP president observed.

He also asked the government to realise the fact that thousands of people are involved with this industry.

President of the Noab and Editor of The Independent Mahbubul Alam also feared the production cost of newspaper will increase due to the price hike of newsprint in the international market, and urged the government to reduce the tax on imported newsprint and increase the rate of government advertisements.

Editor and publisher of The Daily Star Mahfuz Anam said the government should come forward to resolve the existing crisis of the country's newspaper industry.

Referring to the newsprint mill owners association's demand to impose 50 percent tax on imported newsprint, he said such demand is a threat to the country's newspaper industry.

Editor of the daily Samakal Golam Sarwar told the meeting that increase of the newsprint price is not a matter of concern for the BSP and Noab only but for all related with the newspaper industry.

President of the National Press Club and Editor of the News Today Reazuddin Ahmed called for an integrated approach to save the country's newspaper industry.

Jugantor Editor Abed Khan, Inqilab Editor MM Bahauddin, Manabzamin Editor Motiur Rahman Chowdhury, Acting Editor of the Ittefaq Rahat Khan, Bangladesh Observer Editor Iqbal Sobhan Chowdhury, president and general secretary of both factions of the Bangladesh Federal Union of Journalists Gias Kamal Chowdhury, Manzurul Ahsan Bulbul, Ruhul Amin Gazi, leaders of both factions of the Dhaka Union of Journalists Elahi Newaz Khan and Shah Alamgir also took part in the discussion and expressed their solidarity with the Noab and BSP demand.

An eight-member steering committee was formed to realise the demands. The committee members included Mahbubul Alam, Barrister Mainul Hosein, Reazuddin Ahmed, Motiur Rahman, Gias Kamal Chowdhury, Manzurul Ahsan Bulbul, Elahi Newaz Khan and Shah Alamgir.

PROPOSALS

The local newspapers have to import 75% of the total amount of newsprint used. The rest of 25% is supplied by the local newsprint industries. Still, for various reasons these industries are often unable to supply the required amount regularly. For the last two years the price has been rising in the international newsprint market. Presently the C&F costs for every ton newsprint range from $580 to $590. And the price is going up every day. Moreover, the government in their budget for 2004-2005 fiscal year has increased the import tariff on newsprint from 22.50% to 25%, a rise of 2.5%.

Apart from this, almost 35% (15% VAT, 4% surcharge, 3% advance income tax, 1% PSI, DF VAT 0.13%, port expenses, shipping agency charge, 2% insurance charge, transportation expenses etc) excise and other expenses have to be paid. Therefore a newsprint importer has to pay almost 60 % extra on tariff, VAT and other expenses after paying the C&F cost. Hence the cost for per ton newsprint comes to around Tk 59,500.

On the other side, according to the SRO no 211-law/2001/1913/Tax of the National Board of Revenue, government's law of purchasing 50% of the ABC quota from the local newsprint market against the exemption of 25% tariff on the other 50%, is not actually coming to any use. Because the newspapers often fail to meet the deadline as the standard of the local newsprint is not up to the mark and there are too many joints.

The past experiences have shown us that it becomes impossible for the local mills to supply the allotted 50% of the ABC quota because of power cuts, technical faults and limitations, lack of raw materials etc. At the same time they can not maintain the supply of high standard newsprint according to the demand. Therefore it becomes risky for the daily newspapers to depend on them because of the uncertainty of supply from the local mills. That's why the provision in the name of tariff exemption by the National Board of Revenue according to circular no 211-law/2001/1913/ Tariff, on the local newspapers and publications, can not be termed practical in any consideration.

We also do not understand how logical it is to provide the special quota facility to the newsprint industry, which is indirectly a financial liability, in the time of competitive market of free trade. Locally produced newsprint costs Tk 42,000 per ton which is equivalent to $665 while in the international market newsprint costs $580/590 per ton. Which means local newsprint is $85 higher in price, but the standard of local newsprint is very bad compared to those of foreign ones. In July 2004, the price was Tk 34,000. Since then till October 2004, in these four months the price was raised to Tk 42,000 per ton.

Why the import tariff on newsprint raw material should be reduced

1) In the last two years the price of newsprint has been increased $150 per ton in the international market. That means two years ago, the rate for newsprint was Tk 41,000 per ton whereas now it is Tk 59,500 which is Tk18,000 more per ton. Of course devaluation of the currency is a factor. Experts believe that newsprint may cost $630 per ton by the end of this year.

2) At the same time the devaluation of taka against US dollar (64-58 = Tk 6) has also paved the way for the recent increased rate of Tk 4,800 in the last two years.

3) We have noticed that when the price of a particular product goes up in the international market, inevitably causing a rise in importing expenses, the government, at least for a short period, relaxes the import duties to reduce import expenses, so that the product is within the buying capacity of people. But newsprint is the only raw material of the newspaper industry, and the price of which in international market has been going up for last two years, and the government has also been increasing the tariff. If this situation continues, future of thousands of journalists and workers involved in the newspaper industry, would be in uncertainty.

4) In our neighbouring countries India and Pakistan, the import duty on newsprint is 5% and 6%, whereas here it is 25%, five times more than these two countries.

5) Though to meet the demand of the readers the newspapers have added more pages, it is not possible to increase the price of a daily taking the current socio-economic situation of the country into context.

6) The rate for every government advertisement is only Tk 208 per column inch. After deducting the income tax and service charge (from 9% to 17%), the net amount a newspaper gets varies from Tk 173 the least to Tk 190, the highest. But in every well-circulated newspaper, black and white space costs Tk 450 for each column inch. In that case, when an advertisement is printed according to the government rate mentioned above, it does not even cover the half of newsprint and printing costs. At the same time the newspapers have to wait for the payments for about three to six months after the advertisement is published. DFP's advertisement rates have not been increased in the recent years also.

7) According to the current market rate, only the newsprint costs more than Tk 7 for a 20/24 page newspaper. Adding the costs of printing, processing, distributing, salaries and other expenses, it costs more than Tk 10 to bring out each copy of a daily. Now after excluding the 35% agent commission, unsold copies and other expenditures, when a copy is sold for Tk 8, the average return from per copy is only Tk 4.55.

When it is a matter of sustenance of an industry and the remuneration of thousands of employees, when the production rate and the standard of the local newsprint have not improved, the matter of withdrawing import duty on newsprint imported as raw material for newspaper industry should get special consideration before the budget for next fiscal year is announced. In that case, the international market and the condition of the local mills, the advertisement market, DFP's advertisement rates, the announcement of new 6th wage board, the price of the newspaper, etc definitely should also be taken under consideration. We believe that the role of the National Board of Revenue in this regard is very significant.

Therefore, the steps mentioned below should be adopted as soon as possible regarding newsprint, to ensure a better future for the newspaper industry:

1) To withdraw the import tariff on newsprint imported for newspaper industry. To fix a minimum rate of 5%,

2) To cancel the circulation by the National Board of Revenue, no 211-law/2001/1913/Tax since it is not possible for the local mills to supply the allocated ABC quota of 50% good quality newsprint.

3) To increase the rate of government/DFP advertisements. To fix at the rate of Tk 500 for each-column-inch.