Japanese Mitsubishi Motors has shown interest to invest in Bangladesh’s CKD assembly plants, speakers said
Businesses and experts on Sunday urged for at least 5-10 years of tariff policy support, along with tax benefits and incentives, to strengthen the local vehicle assembling and manufacturing industry.
They made the call at a webinar titled “Automobile Industry Development: Present Situation and Future Prospects,” organized by the Dhaka Chamber of Commerce and Industry (DCCI).
Industries Minister Nurul Majid Mahmud Humayun joined the webinar as the chief guest, while Ambassador of Japan to Bangladesh Ito Naoki attended as the special guest.
Rizwan Rahman, president of DCCI, said Bangladesh’s automobile sector is mainly dominated by imported reconditioned and new vehicles, mostly from Japan, China, India, Europe, and the US.
“Considering the growing market demand, local and foreign investors are now showing interest in investing in the automobile industry,” he said. “Prior to Covid-19, the automobile market was annually growing by 15% to 20%, with 12% growth in auto parts.”
“Despite having potential, the absence of long-term policy and a consistent tax structure, lack of domestic source of raw materials and relevant skilled human resources, as well as inadequate backward linkage limits development of the automobile manufacturing industry.
“A long-term policy and a minimum 5-10 years of sustaining tariff policy is needed to support the assembling and manufacturing of vehicles,” he further said.
Industries Minister Humayun urged the private sector and foreign investors to set up spare parts and tools manufacturing units in the economic zones. “If needed, a comprehensive policy will be pursued specifically for this industry,” he said.
Ambassador 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 sectors can play a vital role,” he said.
Japanese Mitsubishi Motors has shown interest to invest in Bangladesh’s Completely Knocked-Down (CKD) assembly plants, he informed.
Mitsubishi and Ministry of Industries came to an agreement last month to sign a memorandum of understanding (MoU) to conduct a joint feasibility study on the investment, the ambassador said, adding: “It will create technology transfer and employment opportunities for Bangladesh.”
Taskeen Ahmed, deputy managing director of IFAD Group, presented the keynote paper at the webinar.
He highlighted that Bangladesh has made tremendous progress in the infrastructure sector in recent years.
“Completion of the Padma Bridge will create high local demand for commercial vehicles,” he said.
The commercial vehicle market is worth around $1 billion at present and growth will be sustained in the future, he said.
“In the light engineering sector, the market size of the auto parts industry is worth about Tk1,400 crore, with an annual growth rate of 12%,” Taskeen added.
Md Touhiduzzaman, managing director of Pragati Industries, said they want vehicles to be manufactured locally.
“The more assemblers enter the sector, the more of a boost it will get. Also, focus needs to be given on local manufacturing of spare parts,” he added.
Abdul Haque, president of Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA), John D Dunham, Economic and Indo-Pacific Affairs Unit chief of the US Embassy, and Matiur Rahman, chairman of Uttara Group of Companies, also spoke at the webinar.