Waiting for big vroom

Policymakers are finally responding to a long-time demand of the local motorcycle market.

They have begun a process to withdraw the cap on engine capacity of two-wheelers to allow motorcycles up to 350cc from the existing 165cc.

If high-capacity motorcycles finally get the nod, riders will be able to go for vehicles that can provide better safety and investors will have incentives to pour new funds into the industry to manufacture products for local sale and export. Most importantly, world-famous brands will consider Bangladesh as an investment destination.

Additional Secretary AHM Shafiquzzaman, head of the Import and Internal Trade (IIT) wing of the commerce ministry, confirmed that his office had forwarded a proposal to lift the restriction. Meetings have been scheduled to amend the policy to allow imports of high-end motorcycles and high-capacity two-wheeler engines to be used in local manufacturing.

The "bizarre" restriction

Up until the early 2000s Bangladesh had no engine capacity restriction on motorbikes.

But then the government put a limit on motorcycle engine capacity to 150cc with the reasoning that law enforcers chasing criminals could not keep up with the powerful fast motorcycles, supposedly ridden by law breakers, though there were few such instances.

Commenting on the "bizarre" reasoning, Bengals Motorcycle Club President Salek Shahriyar said other countries tried to keep low-capacity two-wheelers off the highways for the sake of safety whereas Bangladesh did just the opposite.

"Those who ride motorcycles know better that modern, high-capacity engines are popular not only for speed but also for ensuring better control over the vehicles."

Bangladesh now has expressways, and running on them at the minimum speed required can be risky for low-end underpowered motorcycles, he added.

Moreover, high-capacity engines are designed in such a way that it can decelerate and stop quickly. High-end motorcycles are also equipped with advanced braking systems.

"Go to any regional countries that are even behind us in terms of road infrastructure or economic strength, you will see people riding different capacity motorcycles they need and can afford," said Salek, also a former head of marketing at a motorcycle company.

Sri Lankans are riding 250cc motorcycles. India, Pakistan, and Nepal also don't have such limits on engine capacity, he added.

"Accident rates in those countries are much lower than ours". Actually, riders' education and sense of responsibility ensure safety on roads."

Restriction costly for local bike makers

Runner Automobiles Ltd, the pioneer in local manufacturing of motorcycles, started exporting motorcycles to Nepal about three years ago and is now exploring export opportunities to other markets as the government allows the home-grown company to manufacture up to 500cc motorcycles only for exports.

However, since there is a cap on engine capacity, the company cannot conduct test runs of the exportable 200cc motorcycles.

We learn of any issues only after the bikes are exported and hit the road outside, said Runner Chairman Hafizur Rahman Khan. This is not a logical way to create market overseas for a locally-made product.

Hafizur, also president of the Motorcycle Manufacturers and Exporters Association of Bangladesh said, his association had requested the government to reconsider the engine capacity limit.

"Otherwise, the industry's potential to expand might remain unexplored."

Any country, which successfully emerged as a two-wheeler manufacturing hub, be it India, Thailand or Indonesia, had offered two things together to the investors – an attractive home market and a friendly environment to export.

Runner entered into collaboration with American brand United Motors a few years ago but only got the right to manufacture and export the models with lower capacity engines.

United Motors did not agree to let Runner make high-end motorcycles because they were doubtful of success of their products in foreign markets without access to the local market.

Rancon Motorbikes Ltd, the manufacturer of Suzuki motorcycles in Bangladesh, has been writing to the government requesting it to lift the ban, or at least increase the CC limit so that the company can invest further to manufacture high-end Suzuki bikes for local market and also for exports.

Japanese Kawasaki Heavy Industries wrote to the government in late 2019 that it wanted to invest in Bangladesh to manufacture their world-famous motorcycles but with the engine capacity limit the company was apprehensive that their investment would not have expected return.

A similar message was forwarded by Kawasaki's Bangladeshi distributor Asian Motorbikes Ltd.

The restriction is depriving the Bangladeshi motorcycle industry of advanced technologies, said Safat Ishtiaq, head of operations at Asian Motorbikes Ltd.

Most recently, India's iconic motorcycle maker Royal Enfield signed an agreement with local automobile group Ifad to enter Bangladesh.

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Ifad Managing Director Taskeen Ahmed told The Business Standard, "We are tirelessly trying to let the government understand the opportunities we are missing out on." 

"The world's best companies like BMW and Ducati are studying the Bangladeshi market and each of them would invest here if we can welcome them," he said.

Japanese Honda, Yamaha, Indian Hero, Bajaj and TVS have built manufacturing plants here.

Additional Secretary AHM Shafiquzzaman of the commerce ministry said Bangladesh could not afford to keep the restriction as it was going to graduate from LDC status.

"We have to allow trade if we want access to other markets. We also have to attract investment into the industry," he said.

The debate

Bangladesh has already seen around Tk8,000 crore in investments in the motorcycle industry. Bike prices have dropped by around one-third since the government introduced policy benefits for local manufacturing four years ago.

Annual sales crossed five lakh units, which was less than two lakh even in 2016.

Abdul Matlub Ahmad, chairman of HMCL Niloy Bangladesh, a joint venture of Indian commuter motorcycle giant Hero Motocorp  and renowned Bangladeshi automobile house Nitol-Niloy group, believes Bangladesh should keep the restriction on higher-cc motorcycles in line with people's purchasing power here.

Matlub Ahmad, also the president of Bangladesh Automobile Assemblers and Manufacturers, thinks the risk of accidents would be high due to immature riders and bad roads, also strong bikes might be misused by criminals.

On the bizarre argument for which the cap had been put in place, Ifad Managing Director Taskeen said, "Bangladeshi forces have high capacity bikes. They can easily induct more powerful bikes with the current stronger economy if they want to."

Bangladesh Motorcycle Assemblers and Manufacturers Association (BMAMA), however, opposed the idea of withdrawing the capacity restriction too soon. 

It opined, Bangladesh needs development of local vendor industries first and without a meaningful scale investments are not viable there. 

Allowing higher engine capacity bikes at this stage would scatter the current bike market and stress the manufacturers who invested based on the current restrictive policy. 

In 2017, the government increased the engine capacity limit to 165cc from 155cc. 

Bangladesh Honda (Private) Ltd, a joint venture between Japanese Honda and Bangladesh government, also an active member of the association, advocated for keeping the cc-limit for next 3 to 5 years.

To clarify his company's position in a Friday statement, BHL Managing Director and Chief Executive Officer Himihiko Katsuki said, "Honda is not against to increase the CC limit."

"On the other hand, Honda always believes to provide the motorcycles with the highest quality and reasonable price. If the policy changes suddenly then it is not possible to maintain the reasonable price as it needs time for manufacturing the products reasonably." 

"It is appreciated to discuss with the Association to check the readiness of the industry before changing the policy as well as allow the time line," he added. 

Rancon Motorbikes Head Of Corporate Affairs Fahim A Khan, like others who want the cc-limit to go, does not support the argument that high-end motorcycles would eat into the existing market segments because, according to him, only a few of the existing customers would spend on expensive motorcycles.

The Ministry of Industries last year conveyed the opposing arguments to the Ministry of Commerce responsible for formulating and modifying the import policy.

To put an end to this debate, the Bangladesh Trade and Tariff Commission proposed imposing additional registration fees for higher capacity motorcycles similar to that on cars.

The commerce ministry would also wait for the opinion from the ministries of home affairs, and transportation.

Sources said the home ministry was now more open than before to hear the prospects of Bangladeshi high-end two-wheelers.