News / Bangladeshi investments earn APMT and Medlog 10-year tax exemption

Photo: APM Terminals

The terminal and inland logistics arms of Maersk and MSC are both to receive decade-long tax breaks from the Bangladesh government after last week inking separate deals to build container terminal infrastructure in the country.

APM Terminals and MSC’s Medlog will be given 10-year tax waivers as incentives, part of the government’s efforts to promote foreign direct investment.

In addition, foreign technical personnel at APMT’s Laldia Container Terminal (LCT) in Chittagong and Medlog’s Pangaon Inland Container Terminal (PICT) in Dhaka will receive a 50% tax exemption on their income for the first three years.

Abdur Rahman Khan, chairman of the National Revenue Board (NBR), said last week at an event in Dhaka: “We have signed agreements with two foreign port operators just a few days back. These agreements granted 10 years of 100% tax exemption to the companies, including exemptions for technical staff, royalty payments, and dividends.”

Under the initiative, companies investing in 12 types of infrastructure projects under public-private partnership (PPP) arrangements are entitled to the 1tax break.

Chittagong Port Authority this week signed the 30-year build-operate-transfer (BOT) agreement with APMT and local partner QNS Container Services, which can be extended, based on KPIs (key performance indicators), to develop LCT.

The $550m project, designed, financed, built and operated by the investors – a first for Bangladesh port infrastructure – is scheduled to be operational in 2030 with an initial capacity of 800,000 teu. It will offer deeper berths than Chittagong’s current facilities, allowing maximum ship size to increase from 2,800 teu to 6,000 teu.

This week the government awarded the operational tasks of PICT, currently operated by Chittagong Port Authority, to Medlog for 22 years, on the basis of significant investment in the terminal and the launch of barge services to and from Dhaka and Chittagong, to carry boxes, as well as consolidation and logistics services.

PICT has an annual handling capacity of 116,000 teu, with plans to increase it to 160,000 teu. The terminal has a 180-metre jetty capable of handling two barges simultaneously, and can store some 3,500 teu in its yard.

Syed Mohammad Arif, chairman of the Bangladesh Shipping Agents Association, said allowing foreign investment in port services would help spur export growth and efficient handling of trade.

“Each business needs some breathing space. The tax exemption will give them some sort of relief to make business profitable and encourage them to provide better services. Such incentives will help attract more and more foreign investments in Bangladesh’s port sector,” he added.