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‘Excessive VAT on telecom biggest hindrance to Digital Bangladesh’

  • Published at 01:35 am June 1st, 2017
‘Excessive VAT on telecom biggest hindrance to Digital Bangladesh’
How can mobile operators help toward making Digital Bangladesh a reality? As the Bangladeshi telecom industry continues its shift to a digital business model, telecom operators are recasting themselves as technology companies that offer a broad array of digital communications, connectivity, and content services to make Bangladesh a digital one. All the digital services that we avail today require internet or mobile networking. To meet these demand of connectivity, mobile operators or digital service providers playing a very important role. How do mobile phone operators help to boost e-commerce business? E-commerce has brought a revolution in Bangladesh and people can now conveniently sell or purchase through the online marketplace. Mobile operators and digital service providers opened the door for such like services. The digital business and online trade has also birthed many startups in Bangladesh and linked and created many other markets. How can the telecom industry contribute more to GDP? At present, the telecom industry contributes 6.2% to Bangladesh GDP but it has the potential to grow to 8% within 2020. A 1% increase in mobile penetration could lead to an increase in the GDP growth rate by 0.28%, while a 1% increase in internet penetration can lead to an increase of up to 0.077% in the GDP growth rate. In low and middle-income countries like Bangladesh, every 10% increase in broadband penetration accelerates economic growth by 1.38%. How can mobile operators help in promoting digital financing services? By investing in network rollout and innovation, mobile operators have the potential to extend access to mobile services – or digital inclusion – thereby enabling more Bangladeshis to fully participate in the economy and gain access to vital services. What are the challenges to increasing Foreign Direct Investment (FDI) in the telecom sector in Bangladesh? Despite having potential for growth, FDI in the telecom sector is declining as operators’ are unwilling to invest more in the Bangladeshi market. These significant growth potentials failed to help 4 out of 6 mobile operators to come out from loss in last the five years. We have been witnessing declining average revenue per user (one of the lowest in the world) and poor return on investment; this certainly discourages investors from further investment. Higher tax and regulatory issues are ultimately affecting the price of the services and are creating nervousness in investors’ minds about investing in this market. What do you think about the proposed VAT law? Imposing excessive VAT on telecom product/services is one of the biggest hindrances to creating a Digital Bangladesh. I believe this should be the same across all industries, if not lowered for telecoms. There should not be supplementary duty and surcharge on any telecom services and VAT on internet services should be removed. High VAT increases the cost of service which has a negative impact on investment.
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