FE Report

The country's mobile telecom operators said tax on SIM and mobile handsets in the proposed national budget is the biggest barrier to the telecom sector growth and demanded withdrawal of those to materialise the government's dream to establish digital Bangladesh.

They said that telecom sector's growth would be disappointing if SIM tax at entry point and on handsets are not withdrawn.

"If SIM tax and duty on cell phone handset are allowed continue, the mobile and internet penetration will not cross more than 37 per cent," Zakiul Islam, President of Association of Mobile Telecom Operators in Bangladesh (AMTOB), said in a budget reaction at a city hotel Sunday.

The president said the telecom sector has to pay heavy taxes at all stages of operation including infrastructure stage, subscriber acquisition stage, operation stage and profit stages.

"Operators are now struggling even more to overcome this tax burden," he said adding that for every Tk 100 earned, the cell phone companies contribute 50 per cent to the government.

The telecom leader said withdrawal of SIM tax would result in higher market penetration and help the government establish digital Bangladesh.

He said mobile phones have now diversified uses including providing health, education, electronic remittance and agriculture related services.

The AMTOB organised post budgetary meeting was also addressed among others by Chief Executive Officers and top officials of Teletalk, City Cell, Warid, Banglalink, Grameen phone, Rangs Tel.

Grameen Phone Chief Executive Office (CEO) Oddvar Hesjedal, Asfar Chowdhury of Warid, Omar Rashid of Banglalink, Michael Stimour of City Cell, Fazlul Haq of Teletalk spoke at the press conference.

Citing examples of other countries, the GP chief said India's telecom industry's growth is significant as they are paying low taxes.

He said more than Tk 300 billion (Tk 30,000 crore) investment to build countrywide network has helped increase the country's mobile penetration to 4.0 per cent which was also mentioned by the finance minister in the budget speech.

The GP chief said the government revenue may go up to Tk 50 billion (Tk 5000 crore) by 2013 if the tax burden on the sector is decreased.

Mobile operators pointed out that government collection of SIM tax has declined by 65 per cent between Q1 '08 and Q1 '09 from Tk 4.26 billion (Tk 426 crore) to Tk 1.47 billion (Tk 147 crore) due to drop of SIM sale.

They said mobile penetration in the past years has ensured access to telecommunication including voice and access to internet in rural markets and this trend would come to a stop if the SIM tax and duty on handsets are retained.

With the SIM tax in place and 25 per cent tax on import of handsets, future investment in the sector will suffer a fall, the operators said adding that this is particularly true because the operators see new customers now from low income groups.

"For the sake of the industry, we have so far been subsidising the mobile specific taxes which cannot be continued anymore," the AMTOB President said and urged the government to reconsider the decision and withdraw the SIM tax at least at entry point to support growth of mobile industry.