Long-term extension needed for policy support in electronics sector

One of the hallmarks of post-independence Bangladesh's success and pride is its electronics manufacturing industry. 

Thanks to timely government policy support, the reputation and contributions of this sector have extended beyond national borders to the global stage. 

The market for home appliances, including refrigerators, freezers, ACs, TVs, and washing machines, has now surpassed Tk35,000 crore, growing at an annual rate of 10%-15%. This industry employs over five lakh people.

Entrepreneurs have sparked a significant revolution in the production of electronics products in Bangladesh, leveraging government policy support. Currently, around 90% of this Tk35,000 crore market is produced domestically. 

However, two decades ago, the electronics market in the country was valued at only Tk4,000-Tk5,000 crore and was entirely reliant on imports.

Now, not only has this market shifted from import dependence to local production, but a substantial amount of foreign currency is also being earned through exports. Key factors in this transformation include the government's tax holiday facilities and VAT exemptions at the production stage.

Due to policy support, local brands have emerged, and top global brands have established factories in Bangladesh, leading to significant investment in the sector. However, the tax exemptions provided by the government are set to expire in June this year. 

If not extended, this could pose challenges for entrepreneurs in the sector and hinder the government's vision of creating a digital Bangladesh and boosting employment.

To sustain the substantial investment and continued growth in this sector, it is crucial that the tax exemptions be extended long-term. The government has formulated the Vision 2041 and the electronics industry plays a major role in achieving this vision. 

Therefore, we urge that the tax exemption period for this sector be extended for at least 10 more years.

In addition to the existing facilities, further incentives should be offered for the production of energy-efficient products. 

To capture the export market, companies should be provided with bonded warehouse facilities and back-to-back LC facilities.

Nurul Afsar is the Deputy Managing Director of Electro Mart.