The telecommunication industry has received special importance in the proposed budget 2019-20, while new taxation has been imposed. What do you think about it?
Telecom companies are doing business while conforming to government rules at the highest possible rate, in comparison to other sectors. Our foreign partners, and shareholders also know that no business is done outside of the law. Currently, Robi has received the most foreign investment among all the local mobile network operators. However, the proposed budget contains new taxes, and increased duty, which is bound to have a negative impact on this sector. We hope the government will reconsider the tax impositions for the development of this sector.
In this budget, we have noticed that telecom companies have the lowest tax rates, from 0.75% to 2%. What will be the impact on the business given the increased rates?
If the increased rates prevail, then it will disappoint those interested in investing in the telecom sector. The Bangladeshi market has an exceptional market environment for subscribers, as well as for revenue collections. But it will be difficult to bring in additional investment in view of the proposed scenario, if implemented. Rural consumers will suffer the most, as they do not have the purchasing power like the urban population.
There should be long-term policies to boost domestic institutions, as well as to attract foreign investment.
On the other hand, the decision to increase import duty on smartphones from 10% to 25% will hinder the growth of our sector. As a result, customers will not be interested in new smartphones anymore.
Such increase of taxations will also give the wrong message to foreign investors. The government will miss the foreign investment.
In Nigeria and Pakistan, companies pay 0.25%, and 1.5% minimum tax respectively, while in India, there is an alternative minimum tax, but it is unlike our country. Other sectors in our country gets incentives, but the telecom sector does not receive any at all.
The government and the NBR have been telling companies to 'make profit'. Have you received any incentive to attain profits?
If we get a sustainable policy, and ethical support, then it is easy to attain profits by making the right plans for our business.
We saw earlier that the SIM tax was Tk1,200, which gradually decreased to Tk800, Tk600, Tk300 and lastly to Tk100. What will be the effect on the market, when a SIM tax is increased from Tk100 to Tk200 in the telecom sector in the proposed 2019-20 budget? What will be its impact, in terms of telecom expansion in the country?
It will have two effects. Firstly, this will cause negative, and excessive pressure on the customer.
Secondly, the operators will lose their income. The money is being given by the customer, and the operators collect the money, against a service. When the tax increases on a service, its impact on the customer is twofold - first we are forced to reduce the cost of service to make the customer adjust from his previous expenditure. Lastly, the customer can discard availing certain services altogether, which deprives us of revenue.
As a result, our investment stands a risk. We set up a network so that customers can use it. If they do not use it, then our investment return falters.
After much struggle, now we are using 4G. But if we go back, and recollect the 3G experience from a business case study viewpoint, it has been a loss-making project. The four telecom operators lost Tk30,000 crore.
