The Financial Express
Swasti Lankabangla Swasti Lankabangla

Automobile policy  

| Updated: November 20, 2019 20:28:50

Automobile policy   

That the country's first automobile policy is in its final stage and is likely to see the light of the day by next month augurs well for a very important sector. In fact, automobile manufacture deserved attention of the policymakers much earlier. One of the reasons is that the country has been importing a large number of vehicles of all varieties from different countries at a huge cost. From the time a class with moderate means started looking for reconditioned cars, it signalled a marked shift in life-style and living standard choices. It could be a cutting point where automobile industry ventures were best suited. The price of a reconditioned car imported here is at least one and a half times higher than a comparable brand new car manufactured in India. Many Japanese carmakers have set up plants - mostly in collaboration with local entrepreneurs in India - to manufacture their four-wheelers. By the time Indian economy registered steady growth until last year, car companies from France and Italy also followed suit.

Bangladesh can consider itself unlucky to some extent for missing the opportunity of establishing a car manufacturing base at a time when its economy has consistently been on a higher trajectory. Better late than never. The 10-year Automotive Industry Development Policy-2019, as it is titled, envisions the flourishing of a full-fledged automobile industry in the country. The early indication is that the policy concerned is going to be flexible enough to attract foreign and local investment in the sector. Foreign automobile companies will be allowed to have cent per cent investment in plants or may as well go into operation under joint-collaboration arrangements. In either case, they will be allowed to enjoy benefits such as tax incentives under a liberal policy. The ministry of industry issues a highly positive signal for would-be investors in the automobile industry.

Sure enough, the focus right now is on car manufacture for understandable reason. If produced locally, cars will be much cheaper because of the absence of an abnormally high import duty. Even the middle class will be in a position to afford economy class cars. A small car is unlikely to cost more than Tk 400,000. But the main challenge comes from fuel efficiency and maintenance. If the companies can provide regular service, self-driving cars will prove highly economical, in particular. Many of today's young service-holders or entrepreneurs in the information and communications technology sector will opt for such cars instead of motor-cycles which are most accident-prone.

There is no doubt that the clientele base will be quite large and is expected to expand as the economy grows stronger. But if the GDP growth halts, the car industry may experience a business slump like that in India. This year sale of cars in India has slumped abruptly with decline in GDP growth there. So options for export of automobiles have to be kept open preferably to the Middle East and other developing countries where prospects of economies look bright. Again, there is a need for transfer of technology with the focus on electric engines. Efforts are on to shift to clean fuel from fossil fuel and this should not be out of the policymakers' sight.    

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