Govt scraps plan to phase out reconditioned cars
The government has withdrawn its plans to phase out reconditioned car imports over the next five years considering the growing demand for private transport, according to the draft Automobile Industry Development Policy 2021.
The government previously intended to phase out reconditioned car imports in a bid to encourage investments in the local assembly and manufacture of motor vehicles.
But it seems the authorities have since backtracked on this decision as there were no such provisions in the draft policy approved by the cabinet on Monday.
The policy's main objective is to develop the domestic automobile industry by ensuring competence in engineering and the necessary facilities to produce all the required components.
It also emphasises on manufacturing environmentally friendly electric vehicles.
Currently, state-run Pragati Industries assembles cars of Japanese automaker Mitsubishi Motors while PHP Motors, a concern of the PHP Family based in Chattogram, cars made by Malaysia's Proton Holdings Berhad.
Besides, Indian automotive giants Tata Motors and Mahindra & Mahindra seem to be interested in setting up similar partnerships with local manufacturers to grab a bigger share of Bangladesh's growing automobile market.
Meanwhile, Japanese automotive giant Mitsubishi has shown interest in establishing a manufacturing plant in Chattogram.
As per the draft policy, the country's automobile industry has been considered potentially a major industrial sector for the last two decades as it has registered impressive annual compound growth and has contributed greatly to the national economy.
The sector is nearing critical mass thanks to its ability to adopt new technologies and increased efficiency in human resource management.
Bangladesh's automobile industry could even become part of the global supply chain in the future, the draft policy said.
The policy aims to provide a clear roadmap on how to take the country's evolving automotive ecosystem further by implementing specific changes to regulations that govern the design, technology, testing, manufacture, import and export, sale, use, repair and recycling of motor vehicles, their components and services.
Manufacturing units will have to use at least 10 per cent local components in the first year of operation and gradually up to 40 per cent within five years, it added.
Investors will enjoy duty exemptions to import capital machinery and other equipment.
However, they will have to pay 25 per cent duty to import finished components while it will be only 10 per cent duty for locally made components.
If the manufacturers export vehicles or spare parts, the government will provide a 15 per cent cash incentive, the policy said.
Mohammad Shahidul Islam, secretary general of the Bangladesh Reconditioned Vehicles Importers and Dealers Association (Barvida), welcomed the policy as it would help establish a real automobile industry instead of just assembly units.
He suggested testing facilities be set up to ensure use of safe and environmentally friendly technology.
"Purchasing a car is a capital investment for middle-income people and so, consumers expect longevity. So, quality should be ensured," Islam said.
The government should not give investors the scope to take advantage by setting up substandard manufacturing plants as this would lead to a loss of revenue and deprive the consumers of quality products, he added.