Semiconductor industry eyes $1b export by 2030, seeks govt backing, policy changes

Infographic: TBS

With an aim to reach a billion dollar in annual exports by 2030, the Bangladesh Semiconductor Industry Association (BSIA) has sought a set of policy support from the government, including cash incentives and tax-VAT holidays.

In a letter to Commerce Adviser SK Bashir Uddin late last month, the new association urged the government to announce a 25% cash incentive for semiconductor service exports, arguing that such support is essential to remain competitive in the global market.

It further said competing countries have massive state spending on the cards to develop their semiconductor industry and tap into the projected $1.3 trillion global semiconductor market within the next five years.

Pointing to the long-standing support availed by export sectors such as garments, software and IT-enabled services, leather, tea, jute, frozen fish, and shipbuilding, the association said similar support in the form of cash incentives would help attract foreign investment in semiconductor research, development, and infrastructure.

It would also promote high-tech job creation and strengthen Bangladesh's position in the global value chain of electronics and chip design, the BSIA said.

Tax-VAT relief, simplified imports

In a separate letter to Md Abdur Rahman Khan, chairman of National Board of Revenue (NBR), the association requested for a 12-year corporate tax exemption and a 10-year VAT waiver on the procurement of design software, tools, components, and relevant services subcontracted among BSIA members.

It also requested that import of sophisticated machines, essential tools, and equipment should be duty free, while critical testing machinery and devices should fall within a 0–1% duty bracket to align with regional competitors like Malaysia and Vietnam.

The BSIA also sought simplified import and operational procedures. It noted that semiconductor testing machines often need to be leased for a short term from global sources and then re-exported after use.

For that, to avoid excessive procedural delays, the association proposed expedited customs clearance through a green channel and the creation of a dedicated help desk or semiconductor cell within the NBR.

Declaring the semiconductor sector as a priority industry under national industrial and revenue frameworks would unlock further growth, BSIA argued.

It also recommended extending fiscal incentives currently available to Hi-Tech Parks to all companies involved in semiconductor design, testing, packaging, and R&D.

"Bangladesh, despite its delayed entry, has strong potential to leapfrog in this sector," BSIA President MA Jabbar told The Business Standard recently. "We have bold entrepreneurs and brilliant young engineers. What we need now are supportive policies."

The association is actively collaborating with global industry players, peer associations in successful countries, and members of the Bangladeshi diaspora in Silicon Valley to accelerate the sector's development.

Currently, only a few firms, including UlkaSemi and Neural Semiconductor, are engaged in chip design services, generating under $10 million annually. BSIA hopes to scale this up to $1 billion within the next five years.