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The government has withdrawn its plans to phase out reconditioned car imports over the next five years taking into consideration the growing demand for private transport, based on the draft Automobile Industry Development Policy 2021.
The government previously intended to phase out reconditioned car imports in a bid to motivate investments in the neighborhood assembly and manufacture of automobiles.
But it appears the authorities have since backtracked upon this decision as there have been no such provisions in the draft policy approved by the cabinet on Monday.
The policy's main objective is to build up the domestic automobile industry by ensuring competence in engineering and the required facilities to produce all the required components.
In addition, it emphasises on manufacturing green electric vehicles.
Currently, state-run Pragati Industries assembles cars of Japanese automaker Mitsubishi Motors while PHP Motors, a problem of the PHP Family located in Chattogram, cars created by Malaysia's Proton Holdings Berhad.
Besides, Indian automotive giants Tata Motors and Mahindra & Mahindra appear to be enthusiastic about establishing similar partnerships with local manufacturers to seize a bigger share of Bangladesh's growing automobile market.
Meanwhile, Japanese automotive giant Mitsubishi has displayed interest in establishing a manufacturing facility in Chattogram.
According to the draft policy, the country's automobile industry has been considered potentially a significant industrial sector going back two decades since it has registered impressive gross annual compound growth and has contributed greatly to the national economy.
The sector is nearing critical mass because of its ability to adopt new technologies and increased efficiency in human resource management.
Bangladesh's automobile industry might even become the main global supply chain later on, the draft policy said.
The policy aims to supply a clear roadmap 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 automobiles, their pieces and services.
Manufacturing units will need to use at least 10 per cent local pieces in the first year of procedure and slowly but surely up to 40 % within five years, it added.
Investors will love duty exemptions to import capital machinery and other equipment.
However, they will have to pay 25 per cent duty to import finished parts while it will be only 10 % duty for locally made components.
If the manufacturers export vehicles or spare parts, the federal government provides a 15 % cash incentive, the policy said.
Mohammad Shahidul Islam, secretary general of the Bangladesh Reconditioned Vehicles Importers and Dealers Association (Barvida), welcomed the policy since it would help establish a real automobile industry rather than just assembly units.
He suggested testing facilities be setup to ensure make 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 ought to be ensured," Islam said.
The government should not give investors the scope to take advantage by setting up substandard manufacturing plants as this might lead to a lack of earnings and deprive the consumers of quality products, he added.
