Business Report 3

Under-invoicing, double VAT hinder
growth of electrical industry: BEMMA
Bangladesh Sangbad Sangstha . Dhaka

The Bangladesh Electrical Merchandise Manufacturers Association has demanded that the government should take immediate measures to stop under-invoicing by some dishonest importers and address double VAT payment problem in the interest of smooth flourishing of the industry.
'The country's electrical goods industry has huge potentialities but its growth is being hindered due to several problems, especially under-invoicing by some importers and double VAT payment system,' BEMMA president Enayet Hossain Chowdhury told the news agency on Friday.
'We are facing uneven competition from dishonest traders, who import finished or semi-finished electrical products from different countries through under-invoicing and sell them at cheaper rate than locally-made goods. It deters competitiveness and destroys level-plying field,' he said.
Due to under-invoicing, the government is being deprived of a huge amount of revenue annually, he said, adding electrical goods worth about Tk 8,000 crore are imported a year.
He said different sub-sectors of the industry, including those producing light-fittings, fan, switch, socket, plug, ballast and bulb and tube, are victims of the under-invoicing.
Despite reducing duty on raw materials and imposing supplementary duty on imported goods, local electrical industry is facing stiff price competition due to the under-invoicing, Chowdhury said.
According to the BEMMA president, there are 2000 small and medium industries which produce 65 per cent electric goods of the country's total demand and about five lakh people are involved directly or indirectly in the fast-growing industry.
The annual turnover from the industry is nearly Tk 16,000 crore, of which contribution of local producers is about Tk 8,000 crore and the rest comes from importers, he said, adding the demand for electrical goods in the country is increasing at 20 per cent yearly.
Of the total demand, 90 to 95 per cent cables, fans, light- fittings and accessories are produced in the country, Chowdhury said and added, 'If we get proper patronisation and support from the government, we would be able to produce most of other electrical products within five years.'
After meeting local demand, he said, some industries are exporting cables, energy-saving lamp, electrical substation components such as switchgear and transformers, accessories, electrical heater, iron, ballast, fluorescent and automobile bulbs on a small scale to different countries, including Nepal, Bhutan and the Middle East.
Chowdhury said double VAT payment system is one of the main barriers to flourishing the industry. 'Double VAT payment during purchase of raw materials and again on finished products puts burden on the local industry which must be stopped by introducing proper VAT and tax policy,' he added.
He also demanded setting up industrial park comprising plastic, electrical, electronics and light engineering industries.
'To meet requirements of standards and compliance, some common facilities such as testing and training are needed. Without industrial park, it is difficult to develop such facilities,' he said.
If industrial park is established, he said, quality of products would be improved on one hand, while cost would be reduced on the other hand.
About the standard of local electrical goods, Chowdhury said, 'Twenty per cent of our products are of international standard. But 60 to 70 per cent are of Asian standard.