Industries Minister Nurul Majid Mahmud Humayun on Sunday called upon the private sector and foreign investors to set up spare parts and tools manufacturing unit in Bangladesh’s Economic Zones (EZs).

“The government is relentlessly working for the industrialisation of the country. Research and innovation in the sectors are more important,” he told a webinar organised by Dhaka Chamber of Commerce & Industry (DCCI) titled “Automobile Industry Development: Present Situation & Future Prospects”.

Japanese Ambassador 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 (Completely Knocked Down Units) assembling plant, he said. “Mitsubishi and Ministry of Industries came to an agreement last month to sign an MOU to conduct a joint feasibility study on the viability of investment. It’ll create technology transfer and employment opportunities for Bangladesh.”

He also urged for policy support, tax benefits and incentives to grow the industry.

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Humayun said a comprehensive policy will be pursued especially for this industry, if needed.

DCCI President Rizwan Rahman said at least 5-10 years sustaining tariff policy should be taken to support the local vehicle assembling and manufacturing industry.

He said that 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 percent to 20 percent with 12 percent growth in auto parts yearly. 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 added.

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. Rizwan also suggested setting up a separate Automobile Zone and allowing joint ventures for parts manufacturing to create local experts.

Presenting the keynote paper, Taskeen Ahmed, Deputy Managing Director of IFAD Group highlighted that Bangladesh has made a tremendous progress in the infrastructure sector in the recent past.

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

“After the draft Automobile Policy 2018, the market size of motorcycle industry went to a new height. Total investment in this sector is Tk 8,000 crore contributing 0.5 percent to the GDP now. Whereas, reconditioned car constitutes 50 percent of the total car market, on the other hand, 45 percent are used and only 5 percent are brand new. As per the draft, automobile policy government plans to impose a ban on used car imports give incentives to facilitate local industry,” he said.

Taskeen said the commercial vehicle market is around $1 billion and the growth will be sustained in the future. In the light engineering sector, the market size of auto parts industry is about Tk 1,400 crore with an annual growth rate of 12 percent, he said.

John D Dunham, Economic and Indo-Pacific Affairs Unit Chief of the US Embassy said Bangladesh was able to show tremendous growth especially during the last decade. “Bangladesh is graduating into a developing country; therefore, the government needs to tailor ideal policies like tax and investment policies. Bangladesh’s prosperity is important to the USA,” he said.

Md Touhiduzzaman, Managing Director of 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 spare parts manufacturing locally. Every assembler should have a research and development cell for improvement.”

Matiur Rahman, Chairman & Managing Director of Uttara Group of Companies said, “We’re far behind in this sector. A long-term policy and incentives will foster this sector. This is a promising sector and has the opportunity to attract private sector investment. “

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Engineer Syed Imtiaz Ahmed, President of Signal Stream Inc, Canada, said that if Bangladesh can focus on manufacturing electronic control units (ECU) in Bangladesh that are massively used by car and other vehicles manufacturers, then the country will be able to grab a portion of the world automobile industry very soon.

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

Hayakawa Yuho, Chief Representative of JICA Bangladesh, said an appropriate industrial policy is needed to protect and nurture the sector.

“The government may think of providing investment incentives to the private sector investors from home and abroad. The automobile policy should be carefully formulated and implemented since the situation in this sector changes day by day,” he said.