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Proper policy support, tax benefits key to foster local automobile industry

Experts tell DCCI webinar on Automobile Industry Development


Published : 18 Apr 2021 08:21 PM

Speakers at a webinar on Sunday recommended that at least 5-10 years sustaining tariff policy should be taken to support the local vehicle assembling and manufacturing industry. 

They said Bangladesh’s automobile sector is mainly dominated by imported reconditioned and new vehicles mostly from Japan, China, India, Europe and the USA. Considering the growing market demand, local and foreign investors are now showing interests to invest in the automobile industry. Prior to the COVID-19, the automobile market was growing by 15% to 20% with 12% growth in auto parts yearly. 

Dhaka Chamber of Commerce & Industry (DCCI) arranged the webinar titled “Automobile Industry Development: Present Situation & Future Prospects” . 

Industries Minister Nurul Majid Mahmud Humayun, MP joined the webinar as the chief guest. Ambassador of Japan to Bangladesh Ito Naoki also participated as the special guest while Rizwan Rahman, President, DCCI moderated the webinar.  

Industries Minister Nurul Majid Mahmud Humayun, said that the purchasing power is increasing day by day. The private sector and foreign investors to set up spare parts and tools manufacturing unit in the EZs. Government is relentlessly working for the industrialization of the country. 

He also invited FDI in this sector. Research and innovation in this sector are more important, he added. The Minister also said that if needed a comprehensive policy will be pursued especially for this industry.

Ambassador of Japan to Bangladesh Ito Naoki said Bangladesh has a strong possibility to establish its own local automobile industry. When we talk about export diversification, the automobile, light engineering and agriculture-based sector can play a vital role, he said. 

Japanese Mitsubishi Motors showed interest to invest in Bangladesh in the CKD assembling plant, he informed. Mitsubishi and Ministry of Industries came to an agreement last month to sign a MOU to conduct joint feasibility study on the viability of investment. It will create technology transfer and employment opportunities for Bangladesh, he added. He also urged for policy support, tax benefits and

DCCI President in his address of welcome mentioned that despite having potentials, the absence of long-term policy and consistent tax structure, lack of domestic source of raw materials and relevant skilled human resources, as well as- inadequate backward linkage limit the automobile manufacturing industry development. 

He also urged for a long-term policy and a minimum 5-10 years sustaining tariff policy to support the assembling and manufacturing of vehicles. 

He also echoed for a separate Automobile Zone and allowing joint ventures for parts manufacturing to create local experts. Taskeen Ahmed, Deputy Managing Director, IFAD Group presented the keynote paper. 

He highlighted that Bangladesh has done a tremendous progress in the infrastructure sector in the recent past. 

He said after completion of Padma Bridge it will create high local demand for commercial vehicles. Moreover, the BBIN Motor Vehicle Agreement would boost commercial vehicle growth on regional trade dynamics shift, he added. 

After the draft Automobile Policy 2018, the market size of motorcycle industry went to a new height. Total investment in this sector is Tk. 8000 crore contributing 0.5% to the GDP now. Whereas, reconditioned car constitutes 50% of the total car market, on the other hand, 45% are used and only 5% are brand new. 

Md. Touhiduzzaman, Managing Director, Pragati Industries Ltd. said we want vehicles to be manufactured locally. The more assembler will come the more the sector will boost. Also focus needs to be given to the spare parts manufacturing locally. Every assembler should have a research and development cell for improvement.  

Abdul Haque, President, BARVIDA said that the taxation policy should be industry friendly as well as the industry needs more consistent policy support. He also said that the market of 3 wheelers is being enlarged in Bangladesh. He also urged for policy consistency and creating affordability of middle-class people.