VAT exemption and more support to domestic compressor, refrigerator industry recommended

The sector concerned recommend that the VAT (Value Added Tax) exemption facility given to domestic compressor and refrigerator manufacturing industry should be uphold for the greater interest of the local electronics and technology industry. They also opined for extending the policy support required to increase export earnings in this sector by recovering the loss of corona. 

They noted that it is necessary to provide long-term benefits to this sector in order to build Bangladesh as an industrial-rich developed country through the implementation of ‘Vision-2041’.

VAT exemption on compressor and refrigerator production was extended for one year in the budget for 2021-22 fiscal which will end this June. For the interest of boosting and protecting the domestic electronics and high-tech industry, experts have suggested maintaining VAT exemption and providing more assistance in this sector.

According to the concerned, the exemption of VAT at the production stage has resulted in huge investments creating new employments as well as saving the country’s import costs. One of the most essential products refrigerator or fridge is now within the purchasing capacity of the common people. Apart from meeting the domestic demand, the export earning from this sector is also increasing.

The supply crunch of raw materials and spare parts in the international market resulted in price hike. The prices of refrigerator have already gone up at the consumer level. The domestic high-tech industry will face uncertainty if it does not get government supports and assistance like VAT exemption at the production stage as the sector is trying to recover the loss of Corona. Therefore, ministers, government officials and economists opined for increasing the benefits of compressors and refrigerators along with other supports.

State Minister for Planning Dr. Shamsul Alam, in this reagard, said: The present government has been continuously taking multi-furious initiatives for the development and protection of the domestic industrial sector so that they can gain the competitiveness strengths. The existing 15 percent VAT exemption facility to domestic compressor and refrigerator manufacturing industry is also a matter to be considered.

Economist Professor Abu Ahmed said: For a country like ours, industry friendly budget is very much needed. Bangladesh has made huge development in manufacturing compressors and refrigerators. Domestic companies are doing very well in this sector. So it is necessary to increase the tenure of VAT exemption facility given to the domestic compressors and refrigerators manufacturing industry and the reduction of corporate tax to at least 20 percent.

According to industry insiders, unprecedented progress has been made in the country's compressor and refrigerator manufacturing sector due to various industrial support policies adopted by the government in the last decade as well as 100 percent electrification. Bangladesh has emerged as the 14th compressor producing country in the world. This sector has become a potential source of export earning and saving huge amount of import cost. New investments have been made. Recently, a Bangladeshi company has acquired the rights of a fully automated inverter and fixed speed compatible compressor manufacturing plant, along with the rights of research and development (R&D) intellectual property (patents, designs and software licenses), trademarks in 57 countries, with more than 50 years long established 3 European brands. There is no alternative to increase the facilities in this sector in order to maintain this trend of sustainable growth in the domestic high-tech industry.

Bangladesh Trade and Tariff Commission’s Chairman Afzal Hossain said: The existing 15 percent VAT exemption on compressor and refrigerator manufacturing industry is conducive to boost up the domestic industry. It may be continued. We will seriously consider the demands for any kinds of policy supports sought by the domestic entrepreneurs. 

EPB's Director General Mahbubur Rahman expressed hope that a positive decision would be taken in this regard. "The government is interested in any matter that is conducive to the country's industry. I think a positive decision will be taken in regarding the VAT exemption," he added.

Industry Secretary Zakia Sultana has assured that the proposal for extending the tenure of VAT exemption in compressors and refrigerators manufacturing industry will be seriously considered for the development of domestic industries.

According to the stakeholders, the domestic electronics and technology sector, especially the compressor and refrigerator manufacturing industry, is vital for achieving the government’s target of 7.5 per cent GDP in the budget of 2022-23 fiscal. Increasing policy supports and other assistances in this sector will bring benefits to the country's economy in the long run. It will be easy to achieve the goal of building an industrialized and developed Bangladesh by 2041.