Refrigerator sales nearly tripled to 23 lakh units in the last five years, spurred by increasing domestic manufacturing, higher electricity generation and rising purchasing power.
The market would grow 17 percent to 27 lakh units by the end of the current fiscal year, according to a projection by the Bangladesh Refrigerator Manufacturers and Exporters Association.“We see a robust growth of the market driven by sales in the rural and suburban areas,” said Md Sahabuddin, secretary general of the association.
The market has begun to expand fast in recent years as more firms signed up for making refrigerators and started selling the home appliance using their own brands targeting lower and middle income segments.
“Domestic manufacturers are offering refrigerators at comfortable rates and this is one of the main reasons behind the fast growth,” said Sahabuddin.He said the increasing availability of electricity supply in the rural areas, rising buying capacity of the people and the scope to buy a refrigerator through installments are among the factors that are driving the market.
Power generation more than trebled from 3,268 megawatts in 2009 to 11,623MW as of Wednesday. In 2009, 47 percent of the population had access to electricity and it now stands at more than 84 percent.
“Above all, people in the rural areas are getting the appliance at their doorsteps. Proximity is another factor.”
The overall annual market size of refrigerators in Bangladesh is about Tk 10,000 crore, according to Sahabuddin.
Nahid Hasan, marketing manager of Transcom Electronics, said the market would continue to grow in the next to two three years.
He said people who did not think of buying a refrigerator in the past are now considering buying one and this has been possible as prices have declined owing to domestic manufacturing, increasing purchasing power and advancement of technology.
Official figures say per capita income more than doubled to $1,751 in 2017-18 from $843 in 2009-10.
Hasan said in the urban areas, refrigerators have become a lifestyle product among the upper middle and high income families.
In the past, people used to buy refrigerators for long-term use whereas they change it more frequently now, said Hasan.
Locally made refrigerators meet about 90 percent of the annual demand and imported ones meet the rest.
More than half a dozen companies such as Walton, Marcel, Jamuna and Minister make components of refrigerators that are mainly sold in the local market.
Two global electronics giants Samsung and LG have also entered the market and teamed up with Transcom Group and Fair Electronics as well as Butterfly respectively to make televisions, refrigerators and air conditioners.
Domestic manufacturing has received a boost after the National Board of Revenue offered value-added tax and supplementary duty waiver for the imports of raw materials and components for refrigerators on condition of at least 30 percent value addition.
A similar privilege is also given to encourage local manufacturing of air conditioners.
The waiver would expire on June 30, 2019. The development of the sector will be affected unless the benefit continues for at least five years, Sahabuddin said.
He said businesses can import compressors paying 5 percent duty. However, those intending to make it here have to pay up to 25 percent in duty to import raw materials, he said, urging for steps to promote local production.
The development of manufacturing facilities can create nearly 100,000 jobs and widen export prospects, said Sahabuddin.