Draft Automobile Policy
Reconditioned vehicle business sidelined: BARVIDA
The Bangladesh Reconditioned Vehicle Importers and Dealers Association (BARVIDA) alleged that the draft automobile policy of the ministry of industries has sidelined the huge reconditioned vehicles industry and played down its investments, employment and upgraded technology.
The proposed Automobile Policy-2020 aims at promoting manufacturing of brand new motor vehicles locally under complete knocked down (CKD) and semi knocked down (SKD) system as a protection to import of complete built unit (CBU) of vehicles.
BARVIDA President Abdul Haque said, "We want our local manufacturing and foreign direct investment to grow but why bypassing import of used cars which is affordable to people and give huge revenue to government."
He said a lot of incentives and opportunities are given to manufacturing. This type of highly protected investment does not create the necessary value addition in domestic sector and even in some cases domestic value addition may be negative because the CBU units may cost lesser than the CKD or SKD vehicles.
He said the automobile policy must aim at increasing the car ownership by taking into consideration issues which have contributed to the growth of present automobile sector.
The BARVIDA president said the extremely low number of car ownership in the country is a reflection of a number of other factors like: extremely high duty and tax rates, congested and poor quality roads and very high maintenance costs for higher prices of auto parts.
"So unless we can increase car ownership and domestic demand, no major investor in car industry will be interested to open plants and operate in a less competitive local market", he said.
Local demand for cars is on decline which is not a positive sign for massive investment in local manufacturing he said and added that despite some pickup in demand (2012-2015) the numbers of car registrations is very low and declining in recent years.
Registration declined sharply in 2018 and believed to have declined further declined amid the pandemic; Haque said adding that reconditioned vehicles still account for more than 70 per cent of the domestic market.
Another car dealer said the draft automobile policy may aim at phasing out reconditioned cars eventually to destroy its domestic market. He said any taking over of the market by complete build car will have adverse impact on government revenue because of the existing high duty and tax rates.
Imported automobiles still pays close to Tk50 billion as revenue and its phasing out will lead to a significant loss of revenue that the government can hardly afford.
A senior official in the ministry of industry said, "We have just formulated the draft and there is still scopes for further amendments and review."
He said they have already talked to representatives of imported second hand vehicles and knew of the views. He said the new policy aims at bringing foreign direct investments either as joint venture or 100 per cent ownership by foreign companies.