Bangladesh News Desk
Published:13 Jun 2022, 06:31 PM
Proposed budget to encourage fridge assemblers, raise import, full-fledged local industry at stake
In line with the proposed budget for the fiscal year 2022-23, tariffs on import of spare parts at the local refrigerator and freezer production industry have been significantly cut down.
Industry
insiders believed that the cut in import duties will give a further boost to
the local fridge assembling industry which will hinder the government's plans
to cut overall imports of the country. Apart from, investments in the local
full-fledged refrigerator and freezer manufacturing industry will be at stake.
Finance
Minister AHM Mustafa Kamal presented the 2022-23 fiscal year's budget proposal
in the parliament on Thursday last (June 9).
In his
budget speech and post-budget press conference, the finance minister said, 'We
are discouraging imports of products that are locally manufactured. If the
products that are produced in the country are used by us, the local production
should be further increased. We do not want to see these products imported from
abroad. Doing this, we will take the concept of 'Made in Bangladesh' forward.'
But the sector related sources say, there is no reflection in the budget
proposal given to the local fridge manufacturing.
Immediately
with the budget proposals, the Internal Resource Division of Finance Ministry
issued a SRO. In the SRO, tariff on import of spare parts are fixed at two
categories of local refrigerator and freezer manufacturing industry. According
to the SRO, a company will be considered as Category-1 refrigerator
manufacturer industry if it produces main parts and one or more some important
parts of the refrigerator. The industry that produces only the body cabinet of
refrigerator will be considered as Category-2 refrigerator and freezer
manufacturing industry.
In this way,
there are no difference between the full-fledged manufacturing and assembling
industry. As a result, huge investment in setting up full-fledged manufacturing
industry will be discouraged. Local entrepreneurs will be more interested in
setting up assembling plants instead of a full-fledged manufacturing based one.
Thus, the country will lose the opportunity to create huge amount of
employment. On the contrary, import costs will increase. It will cost a huge
amount of foreign currency. Which is in conflict with the government's
industrial support policy and the finance minister's budget speech. This will
encourage the assembling based industry instead of the full-fledged
manufacturing industry in refrigerator. The concerned people have expressed the
view that the matter needs to be reconsidered.
According to
the country's economists and stakeholders, local assemblers at the refrigerator
manufacturing stage will be benefited from the budget proposal. In this
context, import of spare parts in the assembling based domestic refrigerator
producing industry would be increased, which is contrary to the implementation
of the government's plan to reduce country's import.
Industry
insiders and experts noted that Bangladesh is now self-sufficient in
refrigerator production. The country's electronics and technology industry has
moved towards productivity with the help of industry-friendly policies and tax
assistance provided by the National Board of Revenue and the government. At
present, a number of full-fledged local electronics manufacturing industries
have been developed in the country. The local entrepreneurs made huge
investment in setting manufacturing-oriented industry. These industries are now
making finished fridge and all other essential parts in the country. Major
portion of the domestic market have been captured by the locally finished
goods. Also, local industries made products are being exported to many
countries of the world. The 'Made in Bangladesh' tagged local industries
produced refrigerator is getting wide acclaim in the world market.
When the
refrigerator and electronics industry in Bangladesh is moving towards full
productivity, it should not be encouraged the assembling industries in this
sector.
Dhaka
University's Professor of the Economics Department Md. Iftekhar Hossain said
that, policy and duty supports should not be given to the assemblers in the
sectors in which the full-fledged manufacturing industry have been developed
and they have the ability to meet the local market demands.
Economist
Abu Ahmed said the government has always give importance on boosting the
domestic industries. It is also good for the country's economy. However, the
decision has to be made to give benefits according to the production volume. If
the finished product producers are contributing more than the amount of
production in the assembling industry, then the producer benefits should be
increased.
Jagannath
University Professor of Economics Md. Ainul Islam said, the government wants to
promote 'Made in Bangladesh'. The attitude of the government is that produce
for the country, produce within the country. This will create employment in the
country. It is better to give opportunity and importance to producers of all
levels. However, in some cases, policies are needed to ensure that the
productivity of some products and self-sufficient producers can be created in
the country. In this case, some issues should be in the plan of the government.
He said,
since the government is inviting new manufacturers in the domestic compressor
and refrigerator manufacturing industry, it means that the government is giving
special importance to this sector. However, those who are self-sufficient must
be given priority.
According to
the concerned, the government is giving a lot more to the entrepreneurs in the
full-fledged electronics and technology products sector of the country. As a
result, local and foreign investment is increasing, employment and domestic
production are increasing, import expenditure is decreasing. On the contrary,
export income is increasing. Which is contributing to the revenue sector. On
the other hand, giving tax concessions to the assembling industry in this
sector will increase the number of assemblers instead of the actual producers,
as well as increase the import of spare parts and increase the foreign exchange
expenditure of the country. As a result, the steps taken by the government to
reduce the import cost of the country will be challenged.