- Requirements for 500cc motorbikes
- Import Policy Order 2021-24 has to be amended
- Road permit from BRTA is needed
- Home ministry clearance is also necessar
- Over 6 lakh motorcycles were sold in FY21
- The market has potential to grow to 20 lakh units annually
The government has finally begun allowing local manufacturing of up to 500cc mid-size motorcycles, up from the existing limit of 165cc engines.
The industries ministry on Sunday gave its seal of consent to Ifad Motors Ltd to locally produce the high engine capacity motorcycles, a source in the ministry told The Business Standard.
Ifad Motors is now setting up its motorcycle factory in the Bangabandhu Sheikh Mujib Shilpa Nagar at Mirsarai, Chattogram to manufacture the iconic Royal Enfield bikes with 350cc and bigger engines, the company's Director Taskeen Ahmed told TBS yesterday.
The industries ministry on Monday wrote to the commerce ministry to amend the draft Import Policy Order 2021-24 so that local plants can import essential raw materials and parts for manufacturing up to 500cc motorcycles, said ministry officials.
The existing policy does not allow imports of any motorcycles having over 165cc engines or their parts for the local market. Local manufacturers can, however, produce motorcycles with high engine capacity up to 500cc only for exports.
The manufacturing approval to Ifad Motors and the proposed amendment to the Import Policy Order will remove this bar, meaning that manufacturers can sell their higher engine capacity motorcycles both in local and export markets.
Ifad Director Taskeen Ahmed told The Business Standard that it will take 12-18 months to begin its Royal Enfield manufacturing.
"This is a constructive move towards attracting investments for manufacturing of high-end two wheelers in the country," he said.
The company will need to sell the bikes in the local market because without local sales they will miss the scale for competitiveness that is a must for exports, he added.
To see higher capacity bikes on local roads, a road permit will be needed from the Bangladesh Road Transport Authority (BRTA).
The inter-ministerial meeting
The industries ministry's move comes following a meeting – headed by industries ministry Secretary Zakia Sultana – held on 28 September between government offices concerned and motorcycle industry representatives.
In the meeting, the Bangladesh Motorcycle Assemblers and Manufacturers Association again opposed the idea of allowing higher engine capacity bikes on roads before September 2023.
They feared business losses if engine capacity restriction is now relaxed, according to the meeting minutes obtained by The Business Standard.
On the other hand, Motorcycle Manufacturers and Exporters Association of Bangladesh recommended withdrawal of the engine capacity restriction for the sake of attracting investments in the motorcycle industry.
A representative from the industries ministry in the meeting opined in favour of increasing the motorcycle CC limit, without which companies, such as Ifad, would not be able to set up their factories for advanced bikes.
The development of the motorcycle industry will not be possible with the engine capacity restriction in place as it will hinder local and foreign investments, the Tariff Commission representative opined.
A representative from the commerce ministry in the coordination meeting said the existing restriction in the Import Policy Order was based on previous decisions taken in the meetings between his ministry and the industries ministry.
If the meeting decides to raise the limit, the commerce ministry will amend the policy accordingly, he added.
The BRTA, which gives registration and road permits for vehicles, has no reservation with the motorcycle engine capacity, its representative told the meeting.
The BRTA has not been allowing the registration of higher capacity bikes since early 2000 as law enforcement agencies were concerned that unrestricted engine capacity bikes would make it impossible for cops to pursue lawbreakers.
However, the senior secretary of the Public Security Division of the home ministry also received a copy of the meeting minutes for their positive response towards allowing higher capacity bikes on roads.
In the meeting, a National Board of Revenue representative said since the industries ministry is the sponsoring ministry for the motorcycle industry, the NBR has no objection to the ministry's decisions.
The remaining barriers
Bangladesh, as one of the rare countries in the world with motorcycle engine capacity restrictions, has been trying to remove such an obstacle since the end of last year following some investment proposals to manufacture high capacity bikes locally, while the companies do not find their plan feasible without local market sales.
Based on the Tariff Commission's recommendation and applications from several new investors and the existing exporter Runner, the commerce ministry had initiated a move to allow up to 500CC bikes on local roads.
But the industries ministry opposed the idea to do it before the end of 2023 to ensure market protection for motorcycle assemblers and manufacturers.
Now, since the commerce ministry initiated change, investors are optimistic about getting rid of the restriction on highway-capable motorcycles, which are gaining in popularity with the development in road infrastructure across the country.
Experts across the world say higher capacity motorcycles are safer on roads as they have better control and safety features.
"We would internally discuss the request to amend the Import Policy Order," said Additional Secretary AHM Shafiquzzaman, head of the Import and Internal Trade Wing of the commerce ministry.
"In fact, we wanted the change [allowing big bikes] much earlier," he said.
His office is working on the new Import Policy Order expected to be finalised in a month.
If the needed change cannot be accommodated in the Import Policy Order before that, the industries ministry proposal may be actuated through statutory regulatory order.
Then, the only barrier might remain in place if the law enforcement agencies still hold on their argument regarding chasing criminals that might drag the moves towards building a stronger market and industry for motorcycles in the country, say industry people.
More investments to come
Runner Automobiles, the country's lone motorcycle exporter, on Monday applied to the industries ministry for its approval in manufacturing up to 500CC motorcycles for the local market.
The company is allowed to manufacture 165-500cc motorcycles only for exports and it has been exporting 200cc bikes to Nepal since 2018.
Without local road tests, it is tough to achieve technological excellence and compete in the international market, Runner Chairman Hafizur Rahman Khan previously told TBS.
Japanese Kawasaki also proposed investments to manufacture their high engine capacity bikes if the government allows them on local roads.
Sources at the industries ministry said Kawasaki's local partner Asian Motorbikes Ltd on Tuesday applied for the approval of their plan to manufacture high capacity motorcycles in Bangladesh only if they are allowed to sell both in local and export markets.
Rancon Motorbikes Ltd, the manufacturer of Japanese Motorcycle brand Suzuki, earlier proposed investments to manufacture higher CC bikes if they are allowed to sell both in local and regional markets.
But as the commerce ministry's move was hindered by the industries ministry's objection that cited the need for protection to the existing players in February this year, the Suzuki plan expired.
"Better late than never. We will communicate the recent developments with our Japanese principal and may apply for the same again," said Fahim A Khan, head of corporate affairs of Rancon.
Bangladesh motorcycle industry has progressed a lot after the Motorcycle Industry Development Policy 2018 had been formulated.
Honda, Bajaj, TVS, Yamaha, Hero, Suzuki, Lifan all have followed Runner's trail to manufacture motorcycles in Bangladesh and reduce unit prices.
On average, one-third drop in prices helped the annual market grow to over six lakh units, more than double the number five years ago.
Analysing the stage of economic development, industry people estimate that the annual market has full potential to jump to 20 lakh units in coming years if the government facilitates manufacturing, purchase and use of motorcycles as the vehicle for the commuters.