Days of duty-free imported computers numbered

There is finally going to be a steep hike slapped on imported computers and its parts, after years of pleading by the local producers, who will greatly benefit from this decision.

The move is set to discourage import and make Bangladesh solvent in computer manufacturing, according to experts.

The government has been pondering the decision for the last few years, but this year, sources say, it finally may see the light of day.

If this proposal is passed in the upcoming national budget for 2021-22 fiscal year, the importers will have to pay high tariffs on computer products and spare parts, which were out of the tariff list. On the other hand, if the computers are produced locally, there will be lower tax.

According to sources, a proposal was sent to the Ministry of Finance and the National Board of Revenue (NBR) before the budget for the development of the local computer industry.

It mentioned three categories for computer production in the country.

In the proposal, the first category is for manufacturers. Those who will produce computers and spare parts locally will be given maximum benefits and incentives through duty and tax.

Secondly, the computer assemblers will also get tax exemptions, but less. About 4-5% tax has been proposed in the proposal.

To discourage imports, it has been proposed to impose large tariffs on imports. This rate is about 30-32%.

If this tax is imposed, the price of imported PCs and laptops will go up significantly, and the tech aficionados will have to buy computers at higher prices.

Stakeholders seek more time

According to the Bangladesh Computer Council (BCC), computers and spare parts should be made duty free. This has been demanded by the industry people since 1996. This demand is getting stronger day by day from different sides.

In the 1998-99 fiscal year, the import duty on computer products was withdrawn. Since then, this sector is free of duty and tax.

A sudden decision of imposing duty on computer and computer spare parts will have a bad effect on the market in Bangladesh, the importers say.

If there is no duty-free incentive in the upcoming budget and if the preparation of the local manufacturers is not completed soon, the sudden spike in computer prices may just be too much for the customers to take.

It may lead to a big catastrophe in this industry, said an official of Taiwanese computer brand Asus.

Nafis Imtiaz, marketing manager of Asus in Bangladesh, said that if the import duty was imposed on computer and computer parts, then there would be a big impact on the market, “as the process of manufacturing computers locally is still a long road ahead.”

He cited the import duty imposed on mobile phones the last time, which caused smartphone prices to shoot up. It is still reeling from its effects.

“That may also happen in the case of computers and spare parts,” Imtiaz added.

Currently, the country’s computer market depends on imports.

No one can make international-level brands locally overnight. It will take time, he observes.

At the end of the day, the consumers will have to dish out more money on computers if the duty is imposed.

Everybody has to consider the reality and realize that local computer manufacturing would need time to evolve, before the import duty was imposed. “It will not take more than a year or two. There is an issue of costing and raw materials for production as well,” said the Asus marketing manager.

Saidur Rahman, product manager of Ryans Computers – a leading computer chain store, said that they also did not wish to see import duty being imposed because it would adversely affect their business.

However, there is a scope to file an appeal against this decision if the duty is imposed on computers and spare parts, according to the BCC.

"Will we depend only on imports? We told everyone earlier to enhance local production. But tax should be imposed on local manufacturing leniently," said Tarique M Barkatullah, director (CA operation and security) and director (data center) of the BCC.

"However, we still did not get any authentic information about this. As it is yet to be presented in the upcoming budget, so we do not want to comment on it right now" he added.

Incidentally, local consumer appliance giant Walton has set up a computer manufacturing factory.

Desktops and laptops are produced in that factory, and are also exported to at least five countries in the world.

What about mobile phones?

Now phones are being produced in 10-12 licenced factories in the country, though 14 companies had received certificates for their factories.

At least two more institutions are waiting to get the certificates. Locally-assembled phones are meeting more than 82% of Bangladesh's total mobile phone demand.

Samsung has set up a factory in Bangladesh to produce mobile phones, smart TVs, refrigerators and many other things, except for laptops and desktop computers.

But their factory has the infrastructure to manufacture computers too.

Post and Telecommunication Minister Mustafa Jabbar said that if low tariffs and taxes were imposed on computers and its related products made locally, it would be able to meet the growing demand of the country.

“The duty will be imposed on imported computers only, not on the spare parts. We are trying to keep spare parts import duty-free,” said the minister.

Earlier, Mustafa Jabbar had protested against the tariff and tax.

Now his willingness to impose import duty proves the country’s ability in computer manufacturing and assembling.

“We are now exporting mobile phones. If we have the production capacity, the cost will be reduced by 15%-20% and we can also export Bangladeshi computers. Employment generation will also multiply,” the minister added.