Proposed Duty on Raw Materials
Electronic goods makers fear ruination of Tk400cr industry
Star Business Report
For the last several years, import of finished electronic items has been favoured, but not the local production of those, as duty on the finished items is much lower than that on the raw materials that are used in producing those items domestically, according to industry insiders. They feared that the Tk 400 crore electronic goods industry would face a severe setback, if an enhanced duty on the industry raw materials that has been proposed in the new national budget comes into effect. The locally made electronic products include transistor, IC, resistor, capacitor, transformer, PCB, cabinet and sealed rechargeable battery for UPS. The present number of electronics manufacturing units in the country reduced to 300 from around 3000 units that sprang up during 1985-2000 because of lack of government policy support, observed the Bangladesh Electronic Innovative Manufacturers Association (BEIMA). Most of these 300 units are now engaged in merely trading business, the BEIMA admits. "The higher duty on raw materials is not only affecting the local industry very negatively, but also forcing the local manufacturers to shut down their businesses," said Dr K Siddique-e-Rabbani, the BEIMA chief adviser, told The Daily Star yesterday. In the budget for the 2007-08 fiscal, the government proposed only 3 percent advance income tax (AIT) on battery charge controller for solar PV system and inverter for solar PV system each. The total duty on UPS for computer will be 31 percent, comprising 10 percent customs duty, 15 percent VAT, 3 percent AIT and 1.5 percent advance trade VAT (ATV). On the other hand, total duty on raw materials for battery charge controller for solar PV system, and inverter for solar PV system is 58 percent each, comprising 15 percent CD, 15 percent VAT, 3 percent AIT, 1.5 percent ATV and 15 percent. The total duty on raw materials for electronic components for UPS is around 52 percent and for sealed battery for UPS is around 105 percent. The local electronic manufacturers have long been demanding reconsideration of the import duty structure in such a way that the duty on raw materials should be lowered than it is on finished items. They also demanded fixation of the factory VAT at 1.5 percent instead of 15 percent. With the government's appropriate support, the size of the potential industry would reach Tk 1,000 crore by the year 2015, hoped Rabbani, also a professor of physics at the University of Dhaka. He claimed that the local electronics industry has potentials to export its products to the African, Middle Eastern and CIS (Commonwealth of Independent States) countries.
| 
