Tax concessions given to the refrigerator and freezer assembling industry in the proposed budget for the fiscal year 2022-23 will raise the number of assemblers, instead of the actual producers, according to experts.
Lowering tariffs on the import of spare parts for the local refrigerator and freezer production industry will further boost the assembling industry, hurting the government’s plans to reduce overall imports, they added.
Also, investments in the full-fledged local refrigerator and freezer manufacturing industry will be at stake.
Finance Minister AHM Mustafa Kamal said, “We are discouraging imports of products that are locally manufactured. If the products that are produced in the country are used by us, local production will go up. We do not want these products imported from abroad.”
However, the Internal Resource Division of the finance ministry issued a statutory regulatory order (SRO) with the budget proposals where the tariff on the import of spare parts has been fixed in two categories of local refrigerator and freezer manufacturing industry.
According to the SRO, a company will be considered a category 1 refrigerator manufacturer if it produces main parts and one or more important parts of the refrigerator.
A company that produces only the body cabinet of the refrigerator will be considered a category 2 refrigerator and freezer manufacturer.
This indicates no difference between the full-fledged manufacturing and assembling industries.
The move will discourage the establishment of full-fledged manufacturing industries, the experts said. “Local entrepreneurs will be more interested in setting up assembling plants instead of full-fledged manufacturing ones.”
Md Iftekhar Hossain, professor of economics at Dhaka University, said policy and duty support should not be given to the assemblers in the sectors where there are full-fledged manufacturing industries capable of meeting local market demands.
“The government has always given importance to boosting the domestic industries. It is also good for the country’s economy. However, the decision has to be made according to the production volume,” Economist Abu Ahmed, honorary professor at the economics department of Dhaka University, said.
“If the finished products are contributing more than the production in the assembling industry, then the producers’ benefits should be increased.”
Source: United News of Banglsdesh