As part of the fiscal year 2022-23 budget proposal, tariffs on imports of spare parts for the local refrigerator and freezer manufacturing business have been drastically reduced.
According to industry sources, the government’s ambitions to reduce overall imports of the country will be hampered if import taxes are dropped, as this will give a boost to the local fridge assembly business. Without the Govt Support, investments in the local full-fledged refrigerator and freezer manufacturing industry will be in jeopardy.
On Thursday, June 9, Finance Minister AHM Mustafa Kamal gave the parliament a budget proposal for the 2022-23 fiscal year to the parliament. In his budget speech and at a press conference after the budget, the finance minister said, “We are trying to stop people from bringing in products that are made locally. If we use the things that are made in the country, then the local production should go up even more. We don’t want these things to be brought in from other countries. We will move the idea of “Made in Bangladesh” forward by doing this.” But people who work in the industry say that the proposed budget has nothing to do with the fact that fridges are made locally.
The Finance Ministries subsidiary Internal Resource Division put out an SRO right after the budget proposals. In the SRO, the tariffs on importing spare parts are set in two categories of the local refrigerator and freezer manufacturing industry. The SRO says, Category-1 companies are refrigerator manufacturers if it makes the main parts and one or more essential parts of the refrigerator. Category-2 refrigerator and freezer manufacturing company is the industry that makes only the body cabinet of a refrigerator.
In this way, there is no difference between making things from scratch and putting them together. So, people will be less likely to put in a lot of money to start a full-fledged manufacturing industry. Local business owners will be more interested in setting up assembly plants than factories that make things from start to finish. So, the country will miss out on the chance to create a lot of jobs. On the contrary, costs will go up for imports. It will require a lot of foreign currency. Which goes against the government’s plan to help businesses and the budget speech given by the finance minister. This will help the assembly industry instead of the full-fledged manufacturing industry in refrigerators. Concerned people have said that the issue needs to be looked at again.
Financial experts in the country say that the budget proposal will help local assemblers at the stage of making refrigerators. Imports of spare parts for domestic refrigerator assembly plants would rise as a result, counteracting the government’s stated goal of reducing imports.
Industry experts say that Bangladesh can now make its own refrigerators. With the help of convenient policies and tax help from the National Board of Revenue(NBR) and the government, the electronics and technology industry in the country has become more productive. At the moment, there are a number of full-fledged industries in the country that make electronics. Local business owners put a lot of money into setting up industries that make things. Now, these businesses make finished refrigerators and all other important parts in the country. Most of the domestic market has been taken over by goods made in the country. Also, goods made in the area are sold in many countries around the world. The “Made in Bangladesh” refrigerator made by local businesses is getting a lot of praise on the world market.
When the electronic home appliance industries in Bangladesh are getting closer to full production, the assembling industries in this sector might not add much value or jeopardize the ecosystem.
Md. Iftekhar Hossain, a professor in the economics department at Dhaka University, said that policy and duty support shouldn’t be given to assemblers in sectors where full-fledged manufacturing industries have grown and can meet the needs of the local market.
Abu Ahmed, an economist, said that the government has always put a lot of emphasis on growing domestic industries. It also helps the economy of the country. But it needs to be decided whether to give benefits based on how much is made. If the finished product producers contribute more than the amount of production in the assembly industry, then the producer benefits should be raised.
Professor of Economics at Jagannath University Md. Ainul Islam stated that the government is working toward promoting “Made in Bangladesh.” The government believes that if you want to make something for the country, you should make it in the country. This will help the country find work. It is better to give producers at all levels a chance and value their work. But in some cases, policies are needed to make sure that some products are produced well and that the country can make its own producers. In this case, some of these things should be in the government’s plan.
In his opinion, this indicates that the government places a high value on the domestic compressor and refrigerator manufacturing industry because it is inviting new manufacturers to join the market. Priority must be given to those who are self-sufficient.
The entrepreneurs say that the government is helping them a lot more in the full-fledged electronics and technology products sector.a As a result, both local and foreign investment is going up, as are jobs and domestic production, while spending on imports is going down. On the other hand, export income is going up. Which is helping the earnings sector. On the other hand, giving tax breaks to the assembling industry in this sector will increase the number of assemblers instead of the actual producers. It will also lead to more imports of spare parts and more spending of foreign currency by the country. So, the steps the government has taken to lower the cost of imports will be questioned.