The Financial Express

Bangladesh to offer land free of cost for new electric car plants

| Updated: December 03, 2020 13:51:27

Evaly and Fianancial Express Evaly and Fianancial Express
Bangladesh to offer land free of cost for new electric car plants

Bangladesh will offer land for free to electric car producers as this has huge economic opportunities, PM's private sector industry and investment adviser Salman F Rahman said on Wednesday.

"We'll offer free-of-cost land to the investors who will produce electric cars in Bangladesh," he told a webinar, recalling a recent meeting with German automaker Volkwagen.

He was speaking as chief guest at the event styled 'Car market in Bangladesh: Challenges and prospects' hosted by the Policy Research Institute of Bangladesh (PRI).

Mr Rahman said during his discussion with Volkswagen had invited the German carmaker to set up an electric car-manufacturing unit in Bangladesh.

Bangladesh should leapfrog in the next-generation car-making, not traditional fossil fuel-based car plants, he felt.

He said there will be no conflict of interest if such plants are established in Bangladesh where there is no traditional automobile production units.

"We should go for new technologies which will create new opportunities as the traditional petrol pumps will turn into charging stations let alone the employment."

Economists, businessmen, car importers, researchers, government high-ups and policy-makers joined the event, moderated by Dr Zahid Hussain, former lead economist at the World Bank.

Mr Rahman, however, said Bangladesh is not encouraging any company to set up a car-manufacturing plant here using old technologies.

He was critical of existing high duty on car imports.

The adviser advocated for easing import duty on cars of high CC (cubic capacity) to generate more revenue.

Currently, the NBR collects Tk 50 billion as revenue from car imports but it can reach Tk 100-150 billion if tax is lowered, especially on import of 4000cc cars.

Currently, the duty structure in car imports is very high ranging between 128 per cent and 827 per cent, making car purchase very expensive.

Roads and traffic management must be included in the proposed Automobile Industry Development Policy-2020, Mr Rahman said.

Referring to the recently formed Regional Comprehensive Economic Partnership (RCEP), he said Bangladesh only enjoys benefits offered by other countries, but benefits should be reciprocal.

Echoing Mr Rahman, Dr Ahsan H Mansur, PRI executive director and the keynoter at the webinar, said solar- and power-based auto-manufacturing plants need to be set up in Bangladesh.

"Currently, in the automobile industry, we have almost nothing. But we have the potential to make it a very good sector for our economy."

"We can set up manufacturing plants with new technologies," Dr Mansur mentioned.

Citing failed moves in countries, he said Pakistan could not do better in textile and garment than Bangladesh despite having its own cotton. This is because that country used old machinery in making textile and garment items, he added.

Bangladesh has no cotton of its own but has been performing well because of the deployment of new technologies and machinery by local textile and garment industry people, Dr Mansur noted.

He said the proposed automobile policy should not be taken abandoning the option of reconditioned vehicles, although the demand for new cars here is growing.

"The Indian experience of leaving reconditioned cars has been bad, although it has a huge market of 4.0-million annual demand."

Of the total car sales in a year in Bangladesh, the keynoter said, 70 per cent are reconditioned and 80 per cent of them come from Japan.

Bangladesh's per-capita ownership of cars is very low in the world, even lower than Myanmar and almost 10 times lower than Pakistan.

He said the proposed policy should focus on the export market as the domestic market is small.

Delivering an introductory speech, Dr Zahid Hossain said if $1.0 is spent in car industry, it delivers $3.0 worth value addition to the economy.

He said car industry is called the industry of industries for its economic impact, adding that a plant needs between 5,000 and 15,000 parts to make a car.

Former National Board of Revenue (NBR) chairman Dr Muhammad Abdul Mazid said car industry has the potential to grow a lot if new investment is made targeting both local and export markets as well as backward-linkage industries.

He said Japanese reconditioned cars are actually not so old. "They [Japanese] use one or two years and then export to other economies."

Japan manufactures very good quality cars for her own people but when they produce the same in other countries those are not of very high quality.

Dr Masrur M Reaz, chairman of Policy Exchange of Bangladesh, said the demand for electrical cars in the world will increase to $1.2 trillion soon.

"Investment in car industry should not only focus on domestic markets, but also on foreign markets. Car industry is a diverse sector in the country's economy."

Syed Golam Kibria, NBR member (customs policy and ICT), said duty on car import ranging between 128 per cent and 827 per cent might be reviewed as the structure is high.

He also said the duty on import of completely knocked down (CKD) and completely built knocked (CBU) might be reviewed in the next fiscal budget.

Anwarul Alam, joint secretary of industries ministry, said the government will take the opinions from different stakeholders before the policy formulation.

He said they would host an inter-ministerial meeting on policymaking of car industry soon where recommendations of today's (Tuesday) programme would be placed.

Abdul Haque, president of Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA), suggested the government formulate the policy taking into consideration the country, region and global issues.

They believe in the coexistence of new cars and old cars, Mr Haque stated.

"We welcome the government move to promote car manufacturing in Bangladesh," he said.

Quoting an example of Malaysian Proton Saga, Mr Hoque said the Malaysian plant has eventually been sold out to Chinese entrepreneurs.

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