We believe that any new investment policy should be long-term. We request the government to extend the benefit of VAT-tax exemption for this sector till 2035, said Nurul Afsar, the deputy managing director of Electro Mart, in a recent interview with The Business Post where he shared his thoughts about the challenges and opportunities of Bangladesh’s air-conditioner industry.
What is the air-conditioner (AC) market size in Bangladesh?
The country’s AC market size is currently more than 5,00,000 units. As global warming increases, the temperature in our decade is increasing every year at a rate of 20-25 per cent.
This industry requires skilled manpower. How many jobs have you created?
Skilled manpower is needed to carry out production activities properly. So we are converting educated manpower into skilled manpower through training in technical education. As a result, the creation of skilled manpower in this sector is rising day by day. We are currently providing direct and indirect employment to around 10,000 people.
What challenges do you see in the AC market and how do you plan to address them?
Most of the raw materials used for making ACs are imported. As a result, there is a constant challenge when it comes to the supply of raw materials. Following the outbreak of the Russia-Ukraine war, the exchange rate of the dollar increased and that led to a large increase in the cost of raw materials, which was partially offset by the price of goods.
However, due to our accurate production planning, cost management and pricing of the product, while taking into account the purchasing power of the buyers, the impact of the increase in dollar price on the product price is very limited. However, the effect of changes in consumer purchasing power does not affect the demand for the product due to the correct adjustment in the product price.
The government has been providing various types of support for the development of this sector for more than a decade. The government has given exemption facilities till 2024 on an annual basis. Many including us have set up manufacturing plants here in 2018 and 2019 after the Covid-19 pandemic and Russia-Ukraine war destabilised the global economy.
Recently started Palestinian-Israeli war has again created an unstable situation in the Middle East. As a result, we request the government to extend this benefit of VAT-tax exemption till 2035. Then we can expect the market to develop more. We believe that any new investment policy should be long-term.
Short-term policies cause investors to worry about when it will change. This makes new investors take much longer to invest. Due to this, there is not enough investment in this sector.
Short-term policy support is not very effective as well. It takes at least 10-15 years to reach breakeven for any industrial plant. If new rules come in after a year of investment or policies change, investors get frustrated and their investments become burdensome. That is why no one wants to invest easily.
Considering the market situation, are you planning to expand exports in future?
After balancing the demand for ACs in our country, we have plans to export ACs outside the country. If we talk about the potential, a huge development of ACs is happening in the whole world. So if we can export ACs as per our plan, it will play an important role in the economy in the coming decade and a new industry sector will be created to earn foreign exchange.
Are there any plans to increase production to meet the rising demand?
We want to supply more than 70 per cent of the demand for ACs in Bangladesh by increasing production in the future.
What are your plans to survive in the competitive market of the future?
We are constantly working in our research and development department to make the quality of life easier and more comfortable for people through new technologies and innovations and to bring a quality product to people's doorsteps.
