AC is now a necessity. From households to offices, air conditioners are everywhere. This has become a booming industry, says Mohammad Asaduzzaman, president of the Bangladesh Refrigeration and Air-conditioning Merchant Association. Asaduzzaman, who is also the chairman of the Standing Committee on Refrigeration, Air Conditioning and Cold Chain Policy Implementation of the FBCCI, highlighted the industry's dynamics in an interview with The Business Post’s Md Samiur Rahman Sazzad recently.
Could you tell us about the current market for air conditioners in Bangladesh?
In Bangladesh, there are primarily two types of air conditioners—domestic and commercial. The sizes for domestic units range from one to five tonnes. Last year, the demand was about 4,00,000 units, which has increased to 6,00,000 this year. We anticipate further increases, putting the market size at approximately Tk 5,000 to Tk 7,000 crore.
Some companies are now exporting air conditioners. Would you say it is a booming industry?
Yes, it is definitely a booming industry. Despite the high taxation on imported units, which is almost 235 per cent, compared to just 60-65 per cent for locally manufactured units, some companies are successfully exporting. This could expand further, although there are significant barriers.
What challenges does this sector face?
Air conditioners are now a necessity. From households to offices, air conditioners are everywhere. To assemble one unit, we need about 108-110 different components, most of which are imported.
However, we have to pay a significantly high tax on these parts as air conditioners are considered luxury products.
Moreover, the requirement to file monthly returns poses challenges. Furthermore, since the start of the Russia-Ukraine conflict, we have encountered difficulties with opening letters of credit (LCs) in banks, which often withhold 50 per cent of our funds, causing liquidity problems for entrepreneurs.
They also face difficulties in getting loans, as banks are often reluctant to provide financial support.
What would you like to see change in this sector?
We urgently need tax exemptions or low-interest loans to help entrepreneurs so that we can import parts from different countries to build air conditioners.
We are also approaching RAJUK to integrate air-conditioning designs into building codes to improve service quality for the customers.
Foreign companies are planning to manufacture ACs in Bangladesh. What are your thoughts on this development?
This is good news for us because it will not only foster competition but also encourage our domestic companies to intensify their research and development efforts. I highly appreciate it.
Is there a demand for skilled manpower in this industry?
We have over 50 polytechnic institutes in our country where departments specialising in air conditioning provide hands-on training to students. With advanced training, we can improve their skills, allowing them to significantly increase production.
However, the standard of education and teaching needs improvement as the teachers at technical institutes often lack adequate training, resulting in graduates lacking the skills required by the industry. Consequently, these graduates struggle to find employment.
This calls for immediate government intervention to upgrade educational standards.
