THE economic growth in the last decade has created an opportunity for the local automobile industry to expand its market meeting the growing domestic demand of the rising middle class. Realising its high potentiality, the Ministry of Industry has recently asked the National Board of Revenue (NBR) to give tax benefit for production and assemble of motor cars in the country. The tax benefit would lower the price of car significantly, whether it is assembled or manufactured, compared with the imported cars.
Local newspapers reported that, the Ministry asked NBR to award tax benefits to local production and supply stages, and on import of raw materials and spare parts for the automobile industry. We hope, such business-friendly policy with reasonable tax benefits will attract both domestic and foreign direct investment in the sector. PHP group has already set up an assembling plant in Chattogram. The company has invested Tk 300 crore and is now selling locally made brand new Proton PHP cars in the domestic market. But the local producer has been facing uneven competition in marketing their products due to the existing duty structure which heavily favours car import.
What we also see that, the state-owned Pragati Industries has never been a profitable venture since its birth after country’s independence. Even in 2017, the government increased supplementary duty on completely knocked-down (CKD) cars which put a bar on the competitiveness of local automobile industry. By increasing supplementary duty, the car import was encouraged instead of locally assembled vehicles. Whereas the countries like Thailand developed their local automobile industry by keeping the import duty on spare parts much less than that for completely built cars and introducing other incentives. In India, the local automobile industry has given huge tax and other facilities for expanding business. The giant Indian airmobile manufacturers are now building new cars in collaboration with globally renowned companies, like Toyota, Suzuki, Honda, Mazda and others.
We must say, Bangladesh should not be a dumping ground of foreign reconditioned or low-priced economic cars. Apart from relaxing tax burden, at the same time other barriers also should be withdrawn to help the local automobile industry to stand independently on its own feet.
