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Bangladesh’s bicycle industry needs to curb reliance on imported parts

  • Published at 12:21 am August 6th, 2017
Bangladesh’s bicycle industry needs to curb reliance on imported parts
Bangladesh’s bicycle industry, an emerging export sector, needs new investment to locally manufacture parts instead of importing as it has huge potentials in the global market, said industry insiders. As of 2016, Bangladesh has occupied 11% market share of bicycle in the European Union countries being the third largest exporter. In the last fiscal year, Bangladesh earned nearly Tk700 crore exporting bicycle, especially to the EU market. The industry people and analysts said the country has the capacity to earn Tk1,000 crore from bicycle export. Over 50% of demand of parts, sometimes 70%, are now locally met while the country can be completely reliant on local parts through increasing investment. It will help Bangladesh tap the global market potentials, said analysts. In translating the dream into a reality, the government should pave the way to new investment removing hurdles including cumbersome registration process and higher import duty on raw materials, they said. “Bangladesh cannot produce all the parts needed for manufacturing a complete bicycle. It has to import parts and raw materials to produce parts,” Bangladesh Bi-Cycle Merchants Assembling and Importers Association President Mizanur Rahman Babul told the Dhaka Tribune. “In becoming self-reliant in parts, a large volume of investment is a prerequisite, what Bangladesh did not see due to bureaucratic difficulties and corruption,” he said. Meghna Group is one of the country’s major assemblers of bi-cycle. It bi-cycle unit director (operation) Supol Chandra Saha, however, said it is not possible to produce 100% parts locally but “most can be done.”
In grabbing more market shares, what the bicycle industry needs currently is policy support and infrastructure. Tax holiday on new investment can be attractive for new investors
“It depends on the type of bicycle and in some cases the country produces over 60% of bicycle parts,” he added. AB Mirza Azizul Islam, former finance adviser to a caretaker government, said in keeping the export growth momentum, the country needs to expand the market beyond the EU. He said the government should facilitate foreign investment, especially in manufacturing higher bi-cycle parts. “Also, an investment-friendly atmosphere for local investors must be ensured.” Local Market  In recent years, the use of bicycles in the country has seen 35%-40% growth and the demand rose to about 500,000 units. “The use of bicycles is increasing rapidly here in Bangladesh because of traffic congestion in the capital city and increased consciousness about healthy lifestyle,”  Mahmud Khan, one of the admins of Bdcyclists, a group of cyclists in Bangladesh. The Facebook-based group has over 99,036 members who organise different programmes to encourage people about cycling. Although most of the bicycles used by the cyclists are imported, Meghna Group is leading in local supplies, said Mahmud Khan. He said the local brands maintain international standard “but what’s needed is building users’ confidence in local products. “They will also have to focus on designs both for local and international markets.” Export potentials Despite negative growth in the last fiscal year, there is a huge export opportunity for Bangladesh’s bicycle industry. Cycling is being popular across the globe as an Eco-friendly transport. While health-conscious people are taking bicycles as a mean of their daily exercise in the busy life. [caption id="attachment_144138" align="aligncenter" width="900"]cycle3 Bangladesh ranks third in terms of bicycle export to the European Union countries holding 11% global market share Courtesy[/caption] According to a Persistence Market Research (PMR) report, the global market for bicycles is anticipated to expand by 37.5% over the period 2016-24. The global market size is expected to reach at $62bn by 2024. The Asia Pacific region is anticipated to be the most lucrative market for bicycles over the forecast period while e-bikes will be the leading segment of the market. According to Export Promotion Bureau (EPB) of Bangladesh, in the fiscal year 2016-17, Bangladesh earned $82.46m exporting bicycles to 26 countries. The figure is 16.83% less compared to $99.15m in 2016. United Kingdom imported bicycle of $40.22m, the highest, while Germany imported bicycle of $17.17m followed by Denmark $6.71m, India $5.47m and Belgium $4.97m. The sector people have blamed the devaluation of euro and fall of production capacity for the slowdown. According to a World Bank report (Bangladesh: Diagnostic Trade Integration Study 2013), Bangladesh’s labour costs in the production of bicycles are quite low across the manufacturing stages. It acts as an advantage for manufacturers to remain price-competitive edge in export market. “In grabbing more market shares, what the bicycle industry needs currently is policy support and infrastructure. Tax holiday on new investment can be attractive for new investors,” said AHM Ferduos, General Manager of Alita BD Limited, a manufacturer of bicycles in the Chittagong Export Processing Zone. “Bangladesh has good prospects in bicycle exports. The port congestion and delaying delivery of parts in air shipment are big barriers of the sector. The problems need be addressed as soon as possible,” he added. Talking on negative growth in the last fiscal year, the sector people blamed the prolonged winter in the European countries while devaluation of pound against US dollars was another reason. What Bangladesh produces and exports  Besides complete bicycles, the country also exports accessories such frames, forks, spoke, nipple, mudguard, hubs, spanners, axel, saddle, handle, carrier, bicycle pipe, rim strip, head tube, frame pipe, bicycle tyre and tubes, wheels, pedal, grips, wheels and all sort of plastic components of bicycle.