DHAKA: The local entrepreneurs are showing reluctant to make investment in the establishment of LED chip manufacturing unit in Bangladesh as there is discrepancy in the import duties’ structure between complete LED chip and its necessary raw materials.

LED (Light Emitting Diode) chip is one of the prime raw materials for manufacturing various sorts of LED technology based products like LED TV, light, bulb, mobile, tab, computer monitor and so on.  

About eight sorts of raw materials are required to make a complete LED chip. These are: LED fream, phosphor, carrier tape, plastic reel, cover tape, gold wire, die attach material/adhesive and encapsulation/resin.

Analyzing the import duties’ structure, it was found that the local manufacturers of LED technology based products have to pay less duty for the import of finished LED chip compared to the duty paid on the import of necessary raw materials for manufacturing LED chip.

An importer of finished LED chip has to pay total of 30.79 percent taxes.  On the other hand, if the entrepreneurs import necessary raw materials for producing LED chip, they have to pay 36.78 percent taxes on LED fream, phosphor, carrier tape and cover tape, including 10 percent customs duty on each of the materials. A total of 60.02 percent taxes, including 25percent customs duty and 5 percent regulatory duty, are imposed on die attach material/adhesive. The entrepreneurs have to pay 60.74 percent taxes for the imports of gold wire and encapsulation. Highest taxes are imposed on the import of plastic reel. A total of 130.26 percent taxes are paid by importers of plastic reel, which included 25 percent customs duty, 45 percent supplementary duty and 5 percent regulatory duty.

Such discrepancy in the import duty structure of complete LED chip and its necessary raw materials is disheartening the local entrepreneurs in making investment in the establishment of LED chip manufacturing industry, the sector’s insiders said adding, the country is not moving ahead to the flourish of high-tech industries.

The local entrepreneurs said, production cost of the produced goods with imported LED chip is lower than the goods produced with LED chip, which produced locally. If the local entrepreneurs use locally made LED chip in their final products, they will lose the price competitiveness of their products. As a result, their giant investment in the LED chip manufacturing unit will be at stake. Thus, the manufacturers of LED technology based products are now meeting the demands of LED chip through imports.

Shamsul Arefin Sohel, chairman of Suntex Electronics and Engineering Ltd, said, the government should remove the high import duties on the raw materials for making LED chip for the countries greater interest.

The government has called upon the local entrepreneurs to make investment in the manufacturing unit of energy-efficient products, he said adding, on the other hand, local production  were discouraged through imposing higher import duties on raw materials of LED chip.

At now, local entrepreneurs are manufacturing LED TV, light, bulb and other products with imported LED chip. Some of the businessmen are importing various sorts of complete LED products. For making extra profits, some of them are importing those products, in which low quality LED chip were used, posing a great threat to the environment as those chip emit large volume of lead.

“If LED chip manufacturing units are set up in Bangladesh, it would be possible to maintain highest standard of the produced LED chip,” Sohel said adding, there are some local manufacturers who are eager to set up LED chip manufacturing unit if the prevailing high import duties on necessary raw materials are removed.

Mentionable, the incumbent Finance Minister AMA Muhith always encourages the local entrepreneurs for making investment in the country’s various industrial sectors. During a pre-budget discussion meeting with secretaries of different ministries, Muhith said the government will emphasize more on the protection of local industries in the imminent budget for the fiscal year 2016-17.

Earlier, some sectors like pharmaceuticals, ship building, readymade garments and electronics sector were flourished in Bangladesh through getting necessary policy supports from the government. This time, the local entrepreneurs hoped that the finance minister will look into the matter of high import duties on the raw materials of LED chip during the preparation of the next fiscal’s budget.

BDST: 1147 HRS, APR 4, 2016
AKA