Now Reading: Bangladesh to Surpass Pakistan in Auto Sector Soon with New Auto Policy
Bangladesh is gearing up for the implementation of its automotive policy that will prove to be very beneficial for its auto sector.
The automotive industry is reaching new peaks everywhere. It can be anywhere in the world, the advancement is constant. Everyone wants to be a part of this sector known as auto sector.
More vehicle production, introduction and imports signify that something big is at work. Germany is one of the front runners in the automotive industry today. We cannot ever get tired of naming brands and car models all day long. Newer models are being worked on everyday.
Now it is being heard that Bangladesh is on the fast run in auto sector. According to their new policy, they have come up with plans for automotive manufacture within the country too.
We can measure the auto sector success of a country by how much they can produce. We know that MG Motors recently got the Greenfield status to assemble vehicles in Pakistan on a local scale. Similarly, Bangladesh has come up with a few policies of its own.
They are allowing the production and assembly of vehicles in their own country. Additionally, they will not just get complete vehicle parts to assemble but will be working off of partial parts too.
Auto experts are forecasting that Bangladesh will outplay Pakistan’s auto industry in the coming years after their new Automotive Development Policy (ADP).
Bangladesh New Auto Policy:
The policy entails a stepwise approach for the country moving from the import of Completely Built up Units (CBUs) to the assembly of Semi Knocked Down (SKD) vehicles to the assembly of Completely Knocked Down (CKD) vehicles and ultimate to the completely localized manufacturing of both the parts and vehicles as well as their exports to other countries.
A group of automotive analysts and enthusiasts informed the media that the Bangladeshi automotive policy also details clauses for fuel-efficient internal combustion engine vehicles, hybrid vehicles, electric vehicles (EVs), and vehicles that use alternative fuel like CNG, LPG, biodiesel, ethanol, and hydrogen fuel cells.
They stated that one of the most important clauses in the new policy is that the government will phase out the vehicles that have been in use for five years since their date of manufacturing. Under this clause, the public will not be allowed to use imported cars that are over 5 years old.
The analysts further added that the Bangladeshi automotive policy entails the government letting the automakers import 100 percent SKD parts at 10 percent customs duty for seven years, after which CKD tariff will be applicable. The clause will only be applicable to passenger cars.
Bangladesh Auto Policy vs Pakistan Auto Policy:
First of all, the policy period of Bangladesh Auto Policy for vehicle assembly and auto parts manufacturing will be 10 years. The country’s upcoming policy will stay in action by the year 2030. Pakistan’s ADP, on the other hand, has a policy period of 5 years, which means that Pakistan’s upcoming policy will expire in 2026. Longer policy period ensures consistency in auto regulations and standards. Moreover, it saves the auto industry from being affected by government changes and other political affairs.
Bangladesh is taking a step-wise approach to developing its auto industry. The Bangladesh auto sector will initially import Completely Built-Up (CBU) units, then Semi Knocked-Down (SKD) units, and then move to Completely Knocked-Down (CKD) units. After that, the country will completely localize the production of vehicles. By the year 2030, Bangladesh will, finally, export locally manufactured vehicles to Middle-Eastern countries. Pakistan’s ADP lacks this year-wise breakdown of localizing its auto industry. That is why the auto manufacturers in Pakistan are not on the same page. Some sell imported CBUs, some sell locally assembled SKDs and CKDs, and a few sell locally manufactured vehicles.
Bangladesh auto policy covers all types of vehicles, the traditional internal combustion engine vehicles, electric vehicles, hybrids, and alternative fuel vehicles (CNG, LPG, biodiesel, ethanol, and hydrogen fuel cells). Whereas, Pakistan has different policies for different types of vehicles. Our ADP (2016-2021) covers engine vehicles. We have an EV Policy for 2-3 wheeler electric vehicles and a separate EV Policy for 4-wheelers. Multiple policies are a problem because every policy takes its time to be implemented in the country. Take the example of our EV Policy for 4-wheelers. The government approved it last year but has still not started the implementation process.
Bangladesh is one of the most flourishing and fastest-growing economies in South Asia, with $302 billion economic reserves and an income per capita of $1,855. Its automotive development policy, as pointed out by the experts, is much more thorough compared to Pakistan.
How did Bangladesh manage to upstage its richer relative by so much so fast? It’s all the more puzzling because Bangladesh has no geostrategic assets saleable to America, China, or Saudi Arabia. It also has no nuclear weapons, no army of significance, no wise men in uniform running the country from the shadows, and no large pool of competent professionals. At birth, East Pakistan had, in fact, no trained bureaucracy; it received just one member of the former Indian Civil Service.
In a nutshell, Bangladesh and Pakistan are different countries today because they perceive their national interest very differently. Bangladesh sees its future in human development and economic growth. Goal posts are set at increasing exports, reducing unemployment, improving health, reducing dependence upon loans and aid, and further extending micro credit.
Pakistan on its Way:
While Bangladesh is overtaking Pakistan at a steady pace, it does not signify that Pakistan is not moving forward. 2021 has seen quite a lot of vehicle developments in Pakistan. This includes new brands entering the country and establishing a name of their own.
With the new Pakistani Automotive Industry Development and Export Plan AIDEP (2021-26) that is soon to be introduced, it can only be hoped that Pakistan’s policy is as dynamic as that of Bangladesh, and is also implemented in an effective manner.