Proposed budget likely to encourage refrigerator assembly industry, increase import of spare parts
ONLINE OFFICE FE |
June 12, 2022 12:31:41
In accordance with the proposed budget for the financial year 2022-23, customs duties on the import of spare parts in the local refrigerator and freezer production industry have been significantly reduced.
Industry insiders believed the reduction in import duties would give a boost to the local refrigerator assembly industry, which would hamper government plans to reduce the country’s overall imports. In addition, investments in the local industry of manufacturing refrigerators and freezers in their own right will be at stake.
Finance Minister AHM Mustafa Kamal presented the draft budget for the financial year 2022-23 to Parliament last Thursday (June 9).
In his budget speech and post-budget press conference, the finance minister said, “We discourage imports of locally made products. If products that are produced in the country are used by us, local production should be further increased. We do not want to see these products imported from abroad. In doing so, we will advance the concept of “Made in Bangladesh”. But industry sources say there is no thought given in the budget proposal given to local manufacturing of refrigerators.
Immediately with the budget proposals, the Internal Resources Division of the Ministry of Finance issued an SRO. In the SRO, import duties for spare parts are set for two categories of local refrigerator and freezer manufacturing industries. According to the SRO, a company will be considered as a Category 1 refrigerator manufacturing industry if it produces main parts and one or more important parts of the refrigerator. The industry that only produces the body of the refrigerator will be considered as a category 2 refrigerator and freezer manufacturing industry.
In this way, there is no difference between the full-fledged manufacturing industry and the assembly industry. As a result, huge investments in the creation of a full-fledged manufacturing industry will be discouraged. Local entrepreneurs will be more interested in setting up assembly plants rather than a full fledged manufacturing plant. Thus, the country will lose the opportunity to create a huge amount of jobs. On the contrary, import costs will increase. It will cost a huge amount of foreign currency. This is in contradiction with the government’s policy of supporting industry and the budget speech of the Minister of Finance. This will encourage the assembly-based industry instead of the full-fledged manufacturing industry in the refrigerator. The persons concerned expressed the opinion that the matter should be reconsidered.
According to economists and stakeholders in the country, local assemblers at the refrigerator manufacturing stage will benefit from the budget proposal. In this context, the import of spare parts in the domestic assembly-based refrigerator production industry would be increased, which is contrary to the implementation of the government’s plan to reduce the country’s imports.
Insiders and industry experts have noted that Bangladesh is now self-sufficient in the production of refrigerators. The nation’s electronics and technology industry has evolved toward productivity through 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. Local entrepreneurs have made huge investments in creating a manufacturing-oriented industry. These industries now manufacture finished refrigerators and all other essential parts in the country. Most of the domestic market has been captured by locally finished products. In addition, products produced by local industries are exported to many countries around the world. The refrigerator produced by local industries and bearing the “Made in Bangladesh” label is gaining popularity in the global market.
As the refrigerator and electronics industry in Bangladesh moves towards full productivity, it should not encourage assembly industries in this sector.
Professor from the Department of Economics at the University of Dhaka, Md. Iftekhar Hossain, said that policies and support rights should not be granted to assemblers in sectors where full-fledged manufacturing is undermined. is developed and that they have the capacity to respond to local market demands. .
Economist Abu Ahmed said the government has always placed importance on strengthening domestic industries. It is also good for the economy of the country. However, the decision must be made to grant benefits based on the volume of production. If the producers of finished products contribute more than the amount of output in the assembly industry, then the benefits to the producer should be increased.
Md Ainul Islam, an economics professor at Jagannath University, said the government wanted to promote “Made in Bangladesh”. The attitude of the government is that to produce for the country, to produce within the country. This will create employment in the country. It is better to give opportunities and importance to producers of all levels. However, in some cases, policies are needed to ensure that productivity of certain products and self-sufficient producers can be created in the country. In this case, certain issues should be included in the government’s plan.
He said that since the government is inviting new manufacturers into the domestic compressor and refrigerator manufacturing industry, it means the government is giving special importance to this sector. However, those who are self-sufficient must have priority.
According to those concerned, the government is giving much more to entrepreneurs in the country’s full-fledged electronics and technology sector. As a result, local and foreign investment increases, employment and national production increase, import expenditure decreases. On the contrary, export revenues increase. Which contributes to the revenue sector. On the other hand, granting tax breaks to the assembly industry in this sector will increase the number of assemblers instead of the actual producers, as well as increase the importation of spare parts and increase the foreign exchange expenditure of the country. As a result, the measures taken by the government to reduce the cost of the country’s imports will be called into question.