High taxes dent telecom sector's growth: operators

Mobile operators yesterday blamed high taxes on handsets and duties on mobile services for less-than-expected growth of 3G and other telecom services in Bangladesh.

"The country has missed opportunity every year by increasing tax on either services or handset imports," said the Association of Mobile Telecom Operators of Bangladesh (AMTOB) at a post-budget briefing at Sonargaon hotel in Dhaka.

"Had the government not imposed new tax or increased tax, Bangladesh would have got extra penetration and earned more revenue, which would have eventually taken the country towards digitisation," said Matiul Islam Nowshad, chief corporate and people officer of Robi Axiata.

The government has increased value added tax and customs duty on handsets and imposed supplementary duty and surcharge on mobile phone usage for the fourth consecutive fiscal year in 2017-18, adding more hurdles to the ongoing digitalisation efforts, according to the AMTOB.

Taimur Rahman, senior director of Banglalink, said smartphone penetration could have been at least 40 percent since the launch of 3G in 2013. Smartphone penetration is 27 percent now.

"The handset tax is a hurdle for the industry," said Rahman.

Mahmud Hossain, chief corporate affairs officer at Grameenphone, said the overall 3G coverage is more than 65 percent, and internet penetration stands at about 18 percent.

"These numbers could be better if the government considers the telecom sector as an enabler to the economic development," said Hossain.

AMTOB Secretary General TIM Nurul Kabir said they have so far invested $3.8 billion in the 3G network. However, the return on investment is very low because of handset tax, SIM tax and high spectrum charges.

"The government can earn more from telecom services, and the economic growth can be more than 8 percent if the SIM tax is fully withdrawn and some other taxes are cut," he said.

The operators had demanded withdrawal of VAT from all kinds of internet use, reduction of corporate tax to a rational level, and elimination of SIM tax in the new budget.

But their demands were not met. Rather, the tax on mobile SIM imports was increased and some new taxes were slapped on equipment imports.