March 14, 2020, 6:00:00 PM
Car Manufacturing in Bangladesh: Preparing for the next Biggest Industry after Apparel
People work in a factory of Bangladesh Auto Industries inside Bangabandhu Industrial Park. Photo: Collected
Bangladesh will soon start manufacturing cars, that too electric ones, according to a news report published in The Daily Star with the headline "Local firm to set up a $200m plant to make electric vehicle" in July last year.
Presently the country has 12 million people of the medium-income generating affluent bracket and this segment of the population is growing very fast -- by 10 per cent a year.
Meanwhile importing automobiles requires paying import duties ranging from 130 per cent to 850 per cent. This inevitably results in some consumers not getting their desired vehicles within their affordability.
Automobile density, which is the number of vehicles per unit length of the roadway, in Bangladesh is as low as 0.5 per cent, when the global average is 12 per cent.
Moreover, heavy reliance of fossil fuels and the resulting carbon emissions are working against the country's fight to adapt and mitigate the impacts of climate change.
Bangladesh's initiative to manufacture electric vehicles (EVs) is what present times require and will broaden the economy. The large Chinese and Indian markets with duty-free access for Bangladeshi products will be an added advantage soon, once the sector thrives like that of apparel. The manufacture and export of cars are about to unveil a new horizon for Bangladesh.
There is no substitute for industrialisation for accelerating sustainable development but not at the cost of losing farmland and food sufficiency.
The government has also declared that they would create all kinds of infrastructure at designated places for the establishment of industries that could be availed by local and foreign investors.
The Bangladesh Economic Zones Authority (Beza) has been selecting locations in different districts all over the country for special economic zones.
Bangabandhu Industrial Park is an industrial town being built on 30,000 acres of land by the river Feni. This industrial city is being set up on the west side of Mirsarai. This industrial park is expected to generate 1.5 million jobs.
The BEZA executive chairman laid the foundation stone of Bangladesh Auto Industries (BAIL) in the zone a few months back.
The EVs are said to reduce fuel cost by up to 90 per cent and cut down maintenance cost to 10 per cent only.
With zero emissions its carbon footprint is even lower. While electric vehicles made in Bangladesh are expected to cost half that of current market prices, BAIL will ensure after-sales service and spare parts. This guarantees resale of their vehicles, an important factor for the Bangladeshi market which gives a lot of emphasis on resale value.
Mir Masud Kabir, managing director of the BAIL, explained the opportunities of manufacturing environment-friendly automobiles in Bangladesh by leveraging on the fast-growing market and supportive government policies and incentives.
In the next 25 years, 1.5 billion new generation smart vehicles will be manufactured in the world. The smart vehicles' market size is $30 trillion.
While the BAIL is preparing to manufacture two, three and four wheeler EVs, its sister concerns are gearing up to manufacture lithium-ion batteries, motors, controllers and chargers. These are crucial components of EVs. Thus, it is a 360-degree EV manufacturing ecosystem in development.
The question has arisen as to why the BAIL has taken up such an ambitious plan when this country lacks efficiency in many sectors. The answer lies in the initiators of the BAIL having transformed the internet sector earlier and now seeing the automobile sector as the next frontier with a lot of promise and a success story for Bangladesh after apparel.
So how will this industrial city will be getting a supply of 1.5 million skilled people when these industries will be technology-based? The formation of National Skills Development Authority (NSDA) is a possible answer.
However, the NSDA should prepare plans not only for the human resource just entering the job market but also those intending to make a switch over apprehensions their existing sector might come to be abandoned eventually.