Bangladesh is holding talks with Japanese automaker Mitsubishi on how they could manufacture cars for the first time in the country.
The plan comes nearly two years after Pragati Industries of Bangladesh, a state-run enterprise, started assembling Mitsubishi cars.
“We are holding negotiations with Mitsubishi for car production,” Industries Minister Dilip Barua told the Dhaka Tribune. “It is now at its initial stage. Hopefully, we’ll be able to make a deal."
The country's lone state-owned automobile assembling industry is now assembling Mitsubishi's Pajero car.
Mitsubishi, the sixth largest automaker in Japan and world’s 16th by production, earlier showed keen interest after companies from South Korea and Malaysia planned to set up car plants in Bangladesh to tap the growing market.
“Once the agreement is done, it will move Bangladesh to another level of industrialisation,” said Md Abdul Hamid Sharif, chief executive officer of Auto Con Group.
He said the cost of a same model vehicle, which is sold in Japanese market, will come down by 35% to 40% in the local market, if such vehicle is manufactured in Bangladesh with minimum value addition of 50%-60%.
Sharif, also ex-secretary general of Bangladesh Reconditioned Vehicle Importers and Dealers Association, said value addition should be made mandatory as it will give a big boost to the local light engineering industry that has capacity to produce automobile parts.
In India, 60% value addition is required for setting up a manufacturing plant with joint venture, according to him. Through partnerships among Indian automakers and world giant automakers like Ford, Toyota and Suzuki, a huge number of cars are now being manufactured and exported to the world.
He said Bangladesh needs to upgrade technology for proper support of light engineering industry to recondition the used cars for export markets. The light engineering sector has the potency to play a significant role in technological and economical development along with a vast scope of employment generation.
In Bangladesh, over 90% of light engineering factories are serving the local needs of the people. There are about 1,200 light engineering factories supplying products like spare parts, equipment, capital machinery under sub-contracting schemes, according to a recent study jointly carried out by the Ministry of Industries and European Union.
In September 2011, Pragati Industries Ltd began assembling Mitsubishi's new CR-45 Pajero SUV to make the loss-making concern profitable. In the first five months of the last fiscal year, the company earned Tk71.2m as net profit from selling vehicles worth Tk958m, officials said.
In recent years, the company assembles around 2,000 Pajero cars annually, which are purchased mainly by the government.
