BMCCI castigates budget for not reducing SIM tax
Saturday, 3 July 2010
Fazlur Rahman
Bangladesh-Malaysia Chamber of Commerce and Industries (BMCCI) Friday said the new budget and the proposed telecom act would discourage new investment plans, severely affecting the growth of the country's telecom sector.
"The government has passed the budget without considering much requests of the telecom sector for reduction or elimination of the SIM card tax of Tk 800," said BMCCI Secretary General Ashraful Haq Chowdhury.
The government has also proposed some provisions to impose a maximum of Tk 3.0 billion fine, arrest of telecom industry people without warrant, change in licensing condition without consent of operators and no provision for appeal in the proposed amendment of Bangladesh Telecom Act 2010.
"We feel that the budget and the telecom act will severely affect the growth of the telecom sector of Bangladesh," said Chowdhury.
"We also feel that there will be no significant growth of tele-density and the operators will not be encouraged to bring more investment for expansion of their business."
He told the FE that the telecom sector brought the highest foreign direct investment in Bangladesh and also paid huge amounts of revenue to the government in the recent years. "But no significant positive steps have so far been taken in the budget or in the proposed telecommunication act to support the companies."
The Chamber urged the government to create an investment-friendly environment, provide incentive, change the proposed telecom act and eliminate SIM tax which were required for the growth and development of the industry.
"These all will help increase tele-density, expand telecom network in rural areas and contribute more revenue to the government and generate employment," the BMCCI secretary general said.
Parliament has passed a Tk 1.32 trillion budget for the fiscal year 2010-2011.
But it has mentioned nothing on the reduction of SIM (subscriber identity module) tax or duties on the import of mobile handsets, although the sector leaders and associations concerned have long been demanding withdrawal of Tk 800 SIM tax.
Industry people said there is nothing for the country's telecom operators in the budget and it is not in line with the government's ambitious plan of Digital Bangladesh.
Despite various long-term contributions by the telecom sector to the national economy and the seemingly limitless potential of the sector, it remains ignored in this year's budget, said Zakiul Islam, president of Association of Mobile Telephone Operators of Bangladesh (AMTOB).
He said while the GDP contribution of the telecom sector is far higher than that of any other industry the main burden of the sector - the SIM tax - remains.
"The SIM tax, which is ten times higher than the original purchase price of the SIM, is unjustified in comparison to tax on other technology products. As a result, the sector is still struggling for achieving a friendly policy from the government to sustain its development," the AMTOB president said.
Industry people said although a large segment of population has quickly started using mobile phones, the connectivity remains beyond the reach of the vast majority of people, mostly the rural people.
The country's tele-density currently stands at 38 per cent and the operators have categorically said that tax reduction will ultimately help the government's vision for building a 'digital Bangladesh' by 2021.
They said it would be impossible to link the rural people with telecommunication networks, as the government desired, without reducing the SIM (subscriber identity module) tax or mobile handset tax.
Finance Minister AMA Muhith has also assured the operators of revising the tax structure for telecom industry within the next six months.
The country's six mobile operators - Grameenphone, Banglalink, Robi, Warid, Citycell and Teletalk - now serve over 58.36 million customers, according to Bangladesh Telecommunication Regulatory Commission, the industry regulator.
The eight landline operators have brought 1.02 million customers under their networks. Due to stiff competition both mobile and landline operators pay Tk 800 as connection tax on behalf of their customers, that is blamed for eating up most of their revenues.
The industry people also want reduction in the existing 65 per cent tax on the import of telecom equipment. Besides, the handset importers have demanded a fixed Tk 100 tax on each handset import instead of the existing 12 per cent duty on value.
On average, the sector pays Tk 50 billion in taxes a year to the government. The SIM tax represents 20 per cent of the government revenue from the sector.
Bangladesh-Malaysia Chamber of Commerce and Industries (BMCCI) Friday said the new budget and the proposed telecom act would discourage new investment plans, severely affecting the growth of the country's telecom sector.
"The government has passed the budget without considering much requests of the telecom sector for reduction or elimination of the SIM card tax of Tk 800," said BMCCI Secretary General Ashraful Haq Chowdhury.
The government has also proposed some provisions to impose a maximum of Tk 3.0 billion fine, arrest of telecom industry people without warrant, change in licensing condition without consent of operators and no provision for appeal in the proposed amendment of Bangladesh Telecom Act 2010.
"We feel that the budget and the telecom act will severely affect the growth of the telecom sector of Bangladesh," said Chowdhury.
"We also feel that there will be no significant growth of tele-density and the operators will not be encouraged to bring more investment for expansion of their business."
He told the FE that the telecom sector brought the highest foreign direct investment in Bangladesh and also paid huge amounts of revenue to the government in the recent years. "But no significant positive steps have so far been taken in the budget or in the proposed telecommunication act to support the companies."
The Chamber urged the government to create an investment-friendly environment, provide incentive, change the proposed telecom act and eliminate SIM tax which were required for the growth and development of the industry.
"These all will help increase tele-density, expand telecom network in rural areas and contribute more revenue to the government and generate employment," the BMCCI secretary general said.
Parliament has passed a Tk 1.32 trillion budget for the fiscal year 2010-2011.
But it has mentioned nothing on the reduction of SIM (subscriber identity module) tax or duties on the import of mobile handsets, although the sector leaders and associations concerned have long been demanding withdrawal of Tk 800 SIM tax.
Industry people said there is nothing for the country's telecom operators in the budget and it is not in line with the government's ambitious plan of Digital Bangladesh.
Despite various long-term contributions by the telecom sector to the national economy and the seemingly limitless potential of the sector, it remains ignored in this year's budget, said Zakiul Islam, president of Association of Mobile Telephone Operators of Bangladesh (AMTOB).
He said while the GDP contribution of the telecom sector is far higher than that of any other industry the main burden of the sector - the SIM tax - remains.
"The SIM tax, which is ten times higher than the original purchase price of the SIM, is unjustified in comparison to tax on other technology products. As a result, the sector is still struggling for achieving a friendly policy from the government to sustain its development," the AMTOB president said.
Industry people said although a large segment of population has quickly started using mobile phones, the connectivity remains beyond the reach of the vast majority of people, mostly the rural people.
The country's tele-density currently stands at 38 per cent and the operators have categorically said that tax reduction will ultimately help the government's vision for building a 'digital Bangladesh' by 2021.
They said it would be impossible to link the rural people with telecommunication networks, as the government desired, without reducing the SIM (subscriber identity module) tax or mobile handset tax.
Finance Minister AMA Muhith has also assured the operators of revising the tax structure for telecom industry within the next six months.
The country's six mobile operators - Grameenphone, Banglalink, Robi, Warid, Citycell and Teletalk - now serve over 58.36 million customers, according to Bangladesh Telecommunication Regulatory Commission, the industry regulator.
The eight landline operators have brought 1.02 million customers under their networks. Due to stiff competition both mobile and landline operators pay Tk 800 as connection tax on behalf of their customers, that is blamed for eating up most of their revenues.
The industry people also want reduction in the existing 65 per cent tax on the import of telecom equipment. Besides, the handset importers have demanded a fixed Tk 100 tax on each handset import instead of the existing 12 per cent duty on value.
On average, the sector pays Tk 50 billion in taxes a year to the government. The SIM tax represents 20 per cent of the government revenue from the sector.