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Policy support can accelerate automobile sector growth

Speakers tell DCCI webinar


FE REPORT | April 19, 2021 00:00:00


(Top, from left) Industries Minister Nurul Majid Mahmud Humayun, Japanese Ambassador Ito Naoki, DCCI President Rizwan Rahman and other distinguished persons taking part in a webinar titled 'Automobile Industry Development: Present Situation & Future Prospects' on Sunday

Local automobile manufacturing and assembling industry can flourish with long-term policy support, tax benefit, and development of a backward linkage industry, speakers said at a programme on Sunday.

They also said before going into automobile manufacturing, investors should set up the automobile spare parts and accessories industry first to develop skilled local human resources.

The suggestions came at a webinar on 'Automobile Industry Development: Present Situation and Future Prospects' organised by the Dhaka Chamber of Commerce and Industry (DCCI).

Industries Minister Nurul Majid Mahmud Humayun addressed the event as the chief guest with DCCI President Rizwan Rahman in the chair.

Japanese Ambassador in Dhaka Ito Naoki spoke as the guest of honour.

Besides, Chief Representative of JICA Bangladesh Hayakawa Yuho, Economic and Indo-Pacific Affairs Unit Chief of the US Embassy in Dhaka John D. Dunham, Uttara Group Chairman and Managing Director Matiur Rahman, Pragati Industries Ltd Managing Director Md Touhiduzzaman, Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA) President Abdul Haque, Canada-based Signal Stream Inc President Syed Imtiaz Ahmed, and IFAD Group Deputy Managing Director (DMD) Taskeen Ahmed also spoke at the programme.

Referring to the increased purchasing power of the country's people, the industries minister said the demand for brand new vehicles had been increasing for both personal and commercial use.

There are about 12 million people in the country who are in the middle-income segment and the number is increasing at 10 per cent rate every year, he said.

"Local vehicle manufacturers can take the chance to offer cars at an affordable price to this people who very often can't buy imported cars at the desired price range," he added.

Urging the private sector and foreign investors to set up automobile manufacturing and assembling units, Mr Humayun said a comprehensive policy would be pursued for the sector if the investors come forward.

DCCI president underscored the need for at least 5-10 years of sustaining tariff policy to support the local vehicle assembling and manufacturing industry as well as attracting foreign investment.

He said Bangladesh's automobile sector was mainly dominated by imported reconditioned and new vehicles mostly from Japan, China, India, Europe and the USA.

Referring that the automobile market was growing by 15-20 per cent a year prior to the Covid-19 pandemic, he said considering the growing market demand, local and foreign investors were now showing interest in investing in the automobile industry.

However, Mr Rahman also said there were ample opportunities for local investors to set up plants to manufacture auto spare parts and other accessories as the sector had been seeing over 12 per cent annual growth in the country.

He also called for a separate 'zone' for the automobile industry to bring in joint venture investments for both vehicle and parts manufacturing.

Besides, DCCI president also underlined some challenges of the sector, including a lack of domestic source of raw materials, relevant skilled human resources, inadequacy of backward linkage industry, etc.

Japanese Ambassador Mr Naoki said many European countries as well as Japan had achieved tremendous early-stage economic growth led by the automobile industry.

To reduce sole dependency on the RMG sector in terms of export earnings, light engineering and automobile industry can be an appropriate sector for diversifying the country's exports, he said.

Mentioning that Japanese Mitsubishi Motors showed interest to invest in Bangladesh in the CKD assembling plant, he said Mitsubishi and the Ministry of Industries had come to an agreement last month to sign a MoU in a bid to conduct joint feasibility study on the viability of the investment.

Urging policy support, tax benefits and incentives to grow the automobile industry, he said the initiatives would create huge technology transfer and employment opportunities for Bangladesh.

Besides, Mr Naoki also said many countries had restricted import of used vehicles to help local manufacturers grow.

Uttara Group Chairman said a long-term policy support and incentives would help the sector grow and attract more private sector investment as well as foreign investment.

In a presentation, IFAD Group DMD said after the drafting of Automobile Policy 2018, the market size of motorcycle industry reached a new height with an investment of Tk 80 billion, contributing 0.5 per cent to the GDP now.

He also said the size of the commercial vehicle market was around US$ 1.0 billion while the market size of the auto spare parts industry was about Tk 14 billion.

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