Bangladesh set to outpace Pakistan’s auto sector

Industry officials say policymakers should take cue from Dhaka’s auto policy

LAHORE:

Pakistan’s policymakers should take inspiration from Bangladesh that is likely to match Pakistan’s auto industry volumes in the coming years, said local stakeholders.

Bangladesh, with a $302 billion economy and per capita income of $1,855, will soon be announcing its maiden automotive policy draft for vehicle assembly and auto parts manufacturing. The policy period will be 10 years with the target to reach 10% of GDP ($30.2 billion) by the year 2030.

“Bangladesh is taking a step-wise approach from completely built-up unit (CBU) import to semi-knocked down (SKD) to completely knocked down (CKD) to localisation and export in the next 10-year period,” said a group of auto experts while talking to The Express Tribune on Thursday.

They added that Bangladesh’s policy covered fuel-efficient internal combustion engine vehicles, hybrid vehicles, electric vehicles and alternative fuel vehicles such as CNG, LPG, biodiesel, ethanol and hydrogen fuel cells.

“It is also adopting vehicle scrapping policy under WP29 UNECE regulations,” they said, adding that 20% local contribution in eight years was the requirement for passenger cars.

“They have devised a regime covering localised parts and non-localised parts with the concept of green field, brown field plus a scheme for auto parts makers,” they added.

Under the policy, the experts said, Bangladesh would allow import of 100% SKD parts at 10% customs duty for a period of seven years in respect of passenger cars after which CKD tariff would apply.

“The most important step they have taken is the phasing out of used car imports in five years. They do not allow the import of used cars in the fifth year,” said one industry official.

“We are going to have our next auto policy soon so the good features of Bangladesh’s policy can be replicated easily here as they will really help the local auto industry to achieve its targets.”

Published in The Express Tribune, February 12^th, 2021.

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