The Association of Skin Care and Beauty Products Manufacturers and Exporters of Bangladesh (ASBMEB) has urged the government to grant VAT and supplementary duty exemptions at the production stage for locally manufactured color cosmetics and dermo-skin care products in the upcoming national budget.

The association said such policy support is essential to foster new industries, ensure fair market competition, and make personal care products more affordable for consumers. It emphasized that Bangladesh has strong potential to emerge as a competitive exporter in the global cosmetics market.

According to ASBMEB, entrepreneurs are being encouraged to invest in modern, environmentally friendly factories equipped with advanced technologies. The sector is seen as a promising new export avenue that could help save foreign currency and contribute to economic growth.

Concerns Over Tax Structure

Industry stakeholders have proposed that import duties on key raw materials used in cosmetics and packaging should not exceed 1% on an ad valorem basis. Any additional duties, including regulatory and supplementary duties, should be waived.

They also called for reducing customs duties on soap noodles—the primary raw material for soap production—and eliminating regulatory duties altogether. Under the Customs Tariff Schedule 2025–26, soap noodles currently face a 25% customs duty and a 3% regulatory duty, significantly increasing production costs.

Local manufacturers argue that this high tax burden places them at a disadvantage compared to multinational companies operating in Bangladesh. These companies import raw materials such as RBD palm stearin and crude palm kernel oil at lower duty rates—10% customs duty and zero regulatory duty—allowing them to produce soap noodles at a lower cost.

As a result, domestic producers relying on imported soap noodles face higher production costs, limiting their ability to offer competitive prices in the market.

Call for Fair Competition

ASBMEB President Ashraful Ambia stated that the cosmetics sector holds immense potential, with local production already reducing import dependency, saving foreign currency, and creating jobs. However, excessive VAT and supplementary duties are hindering domestic manufacturers from competing with foreign products.

He also highlighted discrepancies in tariff valuation, noting that imported cosmetics are often assessed at unrealistically low values. This reduces the landed cost of imported goods, creating an uneven playing field for local producers.

The association has recommended aligning tariff values with international market prices and shifting customs assessment from net weight to gross weight to ensure fairness.

Growing Market Potential

Data from the Bangladesh Bureau of Statistics indicates that there are approximately 27.3 million women aged between 20 and 39 in Bangladesh, of whom around 70% are considered cosmetics consumers.

Market estimates suggest that consumers spend nearly Tk 15,000 crore annually on color cosmetics and Tk 25,000 crore on skincare products.

Research by LightCastle Partners and Allied Market Research shows that Bangladesh’s cosmetics market, valued at $1.23 billion in 2020, is projected to reach $2.12 billion by 2027, growing at an annual rate of 8.1%.

Despite this growth, industry sources claim that a significant portion of the market is dominated by smuggled and counterfeit products, resulting in substantial revenue losses for the government.

Policy Support Needed

Economist Dr. Muhammad Mahboob Ali stressed the need to curb imports of substandard foreign products and provide policy support to local manufacturers. He noted that such measures would help reduce capital flight and increase government revenue.

ASBMEB Secretary General Jamal Uddin added that weak policy support has hindered the development of the domestic cosmetics industry. He pointed out that higher taxes on raw materials compared to finished imports discourage local production and investment.

He also warned that the influx of smuggled and counterfeit cosmetics poses health risks to consumers while undermining legitimate businesses.

Export Opportunities

Despite challenges, locally manufactured cosmetics are already being exported to markets including the Middle East, Sri Lanka, Thailand, and the Philippines. Industry leaders believe that with proper policy support and protection, the sector could significantly expand its global footprint.

They concluded that ensuring protection for existing investments and creating a favorable policy environment would attract both local and foreign investors, ultimately strengthening Bangladesh’s economy.