MoI drafts automobile policy, roadmap

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Shamsul Huda The Ministry of Industries (MoI) has drafted Automobile Policy Guideline and Roadmap 2012-2021 aiming to boost up local automobile manufacturing and increase national GDP. The policy guideline and the roadmap have been prepared following support of and consultation with the officials of tariff commission, relevant ministries, divisions and departments as well as local assemblers and manufacturers. In the policy guideline the government has emphasised efforts on gradually developing vending companies as well as assembling and manufacturing units, like Semi-Knocked Down (SKD), Complete Knocked Down (CKD) and locally Complete Built Unit (CBU). The drafted policy has strongly favoured development of the government's current assembling units along with more private investment in motorcycle manufacturing and heavy vehicle assembling. The roadmap has also targeted further private investment in collaboration with foreign companies. According to statistics, Bangladesh automotive market is in its early growth phase, having the potential of rapid expansion in the next ten years. A BRTA source said since the independence in 1971 a total of 1,751,834 vehicles have been registered until June 2012. The number would be triple within 2021, and there are great potentials of local investment in this sector to increase GDP and economic growth. Bangladesh Automobile Assemblers and Manufacturers Association (BAAMA) president and Ifad Group chairman Iftekhar Ahmed Tipu said the government's initiative of drafting automobile policy and roadmap is a good decision. "We were seeking for a particular policy for long, and though late it is still possible to look forward. If the proposed policy finally gets approval, it would help the country to step ahead." He also said along with the government's own assembling company Progoti private investment in this sector is already huge. Currently chassis and engine, which consists 65 per cent value of commercial vehicles, are being imported, and the rest 35 per cent, which includes cost of body, seat, paint, decoration, fitting and others, are added locally. The BAAMA president said though the policy and roadmap are still in the draft stage, the government in its final policy should focus on cumulative development in flourishing local automotive industry. He said primarily the guideline should be flexible, so that instead of complete built up the government can encourage SKD and CKD to facilitate large-scale assembling with imported and locally-made parts. As a good backward linkage industry in the automotive sector has already developed, so gradually apart from SKD there could be investments in CKD and CBU. Investment in motorcycle manufacturing has shown its success. Currently all the parts of motorcycle, except engines, are being manufactured locally, and within a short time 90 per cent of the total demand for motorcycles would be met by the local manufacturers, he added. MoI Deputy Secretary Tapan Kumar Nath said through adopting an automobile policy guideline and roadmap the government wants to boost up local manufacturing and assembling that will save foreign currency, create employment opportunity, add local value and bring foreign investment. He said in the roadmap and policy guideline draft there are strong recommendations for ensuring safety measures in manufacturing critical components, technology transfer, foreign investment, maintaining quality standard and securing long-term sustainable private investment. The draft policy has shown that the motorcycle industry has got sound backward and forward linkage industries, which are a shift to address the demands, felt in different other industries. BAAMA member and chairman of Runner Automobiles Hafizur Rahman said, "For a long time we were expecting a perfect and long-term automobile policy from the government. I have seen the draft of the policy, but there is no particular indication in it on how the investors' rights would be secured." He said in the policy guideline the government should show the ways that will genuinely boost up local automobile sector. Mr. Rahman, who has already invested in motorcycle manufacturing plant, said in India the government provides subsidy and low rate of interest to support their automobile manufacturers and exporters. He said in the policy guideline there are recommendations for developing vendors and backward linkages industries, as a vehicle manufacturing plant requires hundred types of parts. Bangladesh Automobile Body Manufacturers Association vice-president Nasir Uddin Howlader said primarily the government should patronise the sub-contracting manufacturers, who are manufacturing more than 55 types of spare-parts, with loan support and other facilities.