Cabinet nods policy to develop local automobile industry
DHAKA, June 14, 2021 (BSS)-The Cabinet today approved draft of Automobile Industry Development Policy-2021 aiming to develop local automobile industry.
The approval came from the weekly Cabinet meeting held at the Cabinet Room of the Jatiya Sangsad with Prime Minister Sheikh Hasina in the chair.
“We need to develop the automobile industry for our own interest amid the growing demand…We’re thinking for the development of the automobile industry to some extent,” said Cabinet Secretary Khandker Anwarul Islam while briefing reporters at the Secretariat about the outcome of the meeting.
Actually, the government doesn’t want to allow the country to keep its dependency on import, he said.
Anwarul said there is a potential for the development of the automobile industry in the country.
The main objective of the policy is to develop the local industry by ensuring competency in automobile engineering and necessary facilities for production of automobiles and parts, he said.
The Cabinet Secretary said another objective of the policy is to enhance scopes for cooperation and joint-investment between local automobile industries with international automobile brands so that the products of famous brands and models can be produced here at cheaper costs.
He said the Japanese Ambassador in Dhaka has already offered that a famous Japanese company wants to produce their products in Bangladesh.
The policy has been designed in both Bengali and English versions.
Besides, the Cabinet gave the final approval to the draft of the Delimitation of Constituencies Bill, 2021 in a bid to formulate an act, repealing an ordinance promulgated during the military regime in line with the court’s judgment.
“The proposed law has been designed aiming to make an act instead of the existing Delimitation of Constituencies Ordinance 1976,” said the Cabinet Secretary.
No major change was brought to the draft law, he added.
The Cabinet also cleared a proposal for accepting the membership of OIC’s Women Development Organisation (WDO) as well as ratification and signing of the WDO Statute to this end.
The meeting was informed about this year’s February 05-10 visit of the Information and Broadcasting Minister Dr Hasan Mahmud in India.
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Strong bike industry inspires component makers
Buoyed by the government policy aimed at developing the motorcycle industry, local companies are gradually making a foray into the component manufacturing segment with a view to cutting the country's reliance on imports.
The motorcycle industry needs more than 700 components to manufacture a bike. The local light engineering industry can make four components, namely drive chain, seat, stand, and battery.
At first glance, the achievement might seem like nothing compared to the vast requirement. But producing the components locally is a major stride compared to a decade ago when the industry had completely relied on imports to meet the demand.
At least four companies manufacture components in Bangladesh, and one of them is QVC Bangladesh.
Located in Sundarban union in Dinajpur sadar upazila, the company produces around 2.5 lakh drive chains every year against the capacity of about 5 lakh.
ATM Shamsuzzaman, managing director of QVC Bangladesh, started making drive chains in 2014 after seeing the potential of the bike market. He invested around Tk 35 crore to set up the factory, which employs around 200 people.
"My company is unable to fulfil the demand despite running the factory round the clock. Users appreciate the quality of our product," he noted.
QVC Bangladesh supplies drive chains to Grameen Motors, Runner Automobiles, and state-run Atlas Bangladesh.
It meets around 60 per cent of the demand for drive chains of Runner Automobiles.
Officials from Honda, TVS, and Hero have visited his factory and inspected the quality of the product, Shamsuzzaman said, adding that he was optimistic about becoming a supplier of the companies.
Md Tazul Islam, president of the Automobile Components & Accessories Manufacturers Association, said Bangladesh could manufacture all motorcycle components as local vendors had all the resources.
Islam is the managing director of Run Industries, which manufactures motorcycle seats.
Set up at Sibrampur in Faridpur in 2009, the company is the sole seating solution provider to Runner Automobiles and Hero Motorcycle.
It sells more than two lakh seats to Runner and Hero combined. The factory has an annual production capacity of 18 lakh seats.
Local firms could not provide any official data on the annual market size of bike components or spare parts.
The annual demand is worth no less than Tk 500 crore and the market has been growing around 15 per cent per annum for the last 10 years, they said.
The growing demand for the two-wheelers and the Motorcycle Industry Development Policy 2018 has inspired local firms to set up manufacturing facilities or assembly plants to keep prices lower and capture the market share.
Currently, 96 per cent of motorcycles running in the country have either been locally manufactured or assembled.
Around 5 lakh units of motorcycles were sold in 2019. The sales declined to 3.11 lakh units in 2020 as demand fell because of the impacts of the economic slowdown caused by the coronavirus pandemic.
"Local component makers are trying to cater to the motorcycle industry amid challenges," said Hafizur Rahman Khan, chairman of Runner Automobiles, the pioneer in motorcycle manufacturing in Bangladesh.
OBSTACLE FOR LOCAL VENDOR DEVELOPMENT
The government has extended tax facilities to encourage the bike industry to develop local vendors to create world-class products for the local and export markets and to create jobs.
But not a single motorcycle company is working to develop local vendors to produce parts and components. Motorcycle assemblers import finished and semi-finished goods.
WHAT MOTORCYCLE MANUFACTURERS SAY
Khan of Runner Automobiles said policy support was needed to develop local vendors. "Runner is trying to develop local vendors."
Abdul Matlub Ahmad, chairman of Nitol Niloy Group, which assembles Hero-branded motorcycles, said all manufacturers should cooperate with local vendors in the greater interest of the industry.
Shah Muhammad Ashequr Rahman, head of finance and commercial at Bangladesh Honda Pvt Ltd, said manufacturing generated the most robust backward linkages industry through vendors across all sectors of the economy.
He noted the expansion of the motorcycle industry might encourage the growth of the parts component and supporting industries and technical consulting services.
He said the technology transfer was highly required to develop local suppliers. Sound policies and facilities were needed for local suppliers and vendors to produce parts.
"Local manufacturers may be able to offer good quality products at a reasonable price," Rahman added.
Buoyed by the government policy aimed at developing the motorcycle industry, local companies are gradually making a foray into the component manufacturing segment with a view to cutting the country’s reliance on imports.
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Gabtoli flower market eyes export
The government is going to build a modern market with air-conditioned storage capacity in Dhaka's Gabtoli, to maintain and preserve quality flowers which would help local traders gain greater access to the export market.
Once the market is built, flower traders in the capital will be able to maintain a cold chain and store unsold flowers in the market centre.
According to people concerned, the project will help prevent 20%-30% of flowers from rotting and increase the supply of quality flowers to both domestic and foreign markets.
The Department of Agricultural Marketing will implement the project named "Strengthening Flower Marketing System through Market Infrastructure, Preservation, and Transport Facilities."
The Public Works Department (PWD) will supervise the construction and the government has already called for a tender on e-Government Procurement (e-GP), to hire contractors for this work.
Dewan Ashraful Islam, deputy director of the Department of Agriculture Marketing and director of the project, said, "Apart from processing flowers, we will try to have cold storage vans here which can help supply flowers to different markets in the capital while maintaining quality."
"I believe the project will increase the demand for our flowers in the domestic and international market," he added.
According to sources, the PWD has set a target of nine months to complete project construction which is expected to cost Tk27.84 crore. The three-storey market centre will accommodate about 350 wholesale flower traders.
Zahir Uddin Md Babor, organizing secretary of the Bangladesh Flower Association, said the market will draw the interest of educated young entrepreneurs to this profession.
He said, "Now flowers are stored like haystacks. This market will change that situation. Maintaining the cold chain in the whole process will create an opportunity to capture the export market."
"We have been asking the government for this since 2014. The initiative has shed some ray of hope for flower traders who have been facing losses due to the Covid-19 pandemic," he added.
"Moreover, if this market is constructed, the social status of traders scattered in places like Shahbag and Sher-e-Bangla Nagar will change. Big investments will come in this sector," he further said.
The government has already brought modern flower processing machines for the market which will be kept on the ground floor, said the Department of Agricultural Marketing.
The new market will be built next to the old market of the Department of Agricultural Marketing in Gabtoli. The two buildings will have a combined space of 55,000 square feet which will be used for wholesale flower trading.
Sher-e-Bangla Nagar Flower Farmers and Traders Cooperative Society Ltd General Secretary, Md Khorshed Alam, said, "Our business has collapsed during Covid-19. Some 170 traders of the association have been struggling to survive."
"I think this initiative will be a great blessing for flower farmers in the future and neglected flower traders across the country will benefit from it," he added.
Gazi Liakot Ali, owner of Laboni Nursery in Jessore, said, "Farmers at the marginal level would also benefit from the initiative. The market will help quality flowers reach customers in a fresh condition."
The country's flower business entered the export market by sending flowers to Saudi Arabia before Eid-ul-Fitr. However, businesses there objected to accepting the flowers due to problems in processing.
Earlier, authorities in Australia declined to receive flowers sent from Bangladesh on a trial basis citing problems in packaging and processing.
The three-storey market centre will accommodate about 350 wholesale flower traders
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