Wait for riding high-capacity bikes to linger as 165cc limit stays

• New import policy

• Imports of motorcycles beyond 165cc engine capacity barred

• Imports of machinery, other parts to manufacture two-wheelers up to 500cc – only for export – allowed

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• Telephonic transfer limit raised to $5 lakh from $2 lakh for importing goods for business

• Maximum limit of RMG sample imports raised to 1,500 pieces from 700

The new import policy order offers little hope for bikers who have long been waiting to ride high capacity two-wheelers in the country.

The policy, approved in a cabinet meeting chaired by Prime Minister Sheikh Hasina on Monday, retains the bar on the import of all types of motorcycles beyond 165cc engine capacity. Companies registered as motorcycle manufacturers are, however, allowed to import machinery and other parts to manufacture two-wheelers up to 500cc, but only for the purpose of export.

The new policy also prohibits the import of old motorcycles to encourage local manufacturers. Previously, old bikes up to three years old and having a maximum of 165cc engine capacity could be imported to the country.

The policy order will remain in force for a period of three years till 2025 or until a new import policy comes into force.

AHM Shafiquzzaman, additional secretary (imports) to the Ministry of Commerce, told The Business Standard that the policy had been vetted by the law ministry before it was approved by the cabinet.

The cabinet has put forward some observations, he said, adding the observations will be incorporated in the policy and it will be published as a gazette soon. 

The market for high-capacity motorcycles is constantly growing in Bangladesh. In 2021, more than 6 lakh motorcycles were sold in the country, said industry insiders. The figure can rise to 20 lakh soon, they hoped.

Various companies including Runner Automobiles, Ifad Autos, and Rancon Motorbikes Limited are making investments in the production of motorcycles with 500cc or more engine capacity in the country. These companies have long been calling for an increase in the cc limit for domestic use.

Hafizur Rahman, chairman of Runner Group, told TBS, "We already had the opportunity to import machinery and parts for the production of motorcycles up to 500cc for export purposes. We are also exporting such motorcycles. But we wanted the opportunity to sell such high-powered motorcycles in the local market because the buyers of these motorbikes in foreign countries have found some problems with them as we exported them without any road trial."

The new import policy will not help to fulfil the government's dream of developing the automobile industry, he observed.

Safat Ishtiaq, operations head of Asian Motorbikes Ltd, told TBS that they have come a long way in setting up a factory in a joint venture with the Japanese company Kawasaki. "This is excellent that we are getting permission to produce. But it is not clear whether we will be able to sell our products in the local market. Why would investors come here if there is no clear roadmap? The only reason to set up a factory in Bangladesh is that the market inside the country is likely to grow."  

"There are giant manufacturing hubs like India, Thailand, Indonesia in this region, and global brands have factories in these countries. They have their economies of scale there, which is completely absent in Bangladesh. If we continue to produce for the local market, at some point we will be able to compete with those countries in the export market," he added.

Economies of scale are cost advantages reaped by companies when production becomes efficient. Companies can achieve economies of scale by increasing production and lowering costs. 

Unlike other manufacturers, Nitol-Niloy Group, which manufactures motorcycles of the Hero brand, applied to the commerce ministry seeking ban on the use of motorcycles beyond 165cc in the country.

The company argued that they set up plants for manufacturing motorcycles up to a maximum of 165cc according to the Import Policy Order 2015-2018, and, therefore, raising the cc limit would make it difficult to recover investment in these plants and reduce the ability to repay bank loans.

Abdul Matlub Ahmad, chairman of Nitol-Niloy Group, however, told TBS that buyers and manufacturers should have the power to decide the cc limit of motorcycles plying streets in the country.

He welcomed the decision to allow import of machinery and parts for the production of bikes up to 500cc. "I think this is the first step in liberalisation of the automobile industry. In future, the government will surely give permission to ride such motorcycles inside the country."

Mentioning that local motorbike manufacturers got divided into two groups – one in favour of raising the cc limit and the other against it, an official concerned at the commerce ministry told TBS that the import policy order has tried to strike a balance between both of the segments.

When it comes to the import of reconditioned cars, no change has been made in the new policy.

Recently, Uttara Motors proposed the government to break the car import duty slab of 0-1600cc into three slabs – 0-800cc, 801cc-1200cc, and 1201cc-1600cc.

Instructed by the Prime Minister's Office, the commerce ministry has started working on preparing a report in consultations with the National Board of Revenue on this.

After the cabinet meeting, Cabinet Secretary Khandaker Anwarul Islam told reporters that the new import policy has restricted the import of some goods while eased the import of some others.

"Until now, a maximum of $2 lakh worth of goods could be imported through telephonic transfer (TT). The maximum limit has now been increased to $5 lakh," he added.

"The government has raised the TT limit as it is very easy to import products through this method. But the facility can be used only for the purpose of business; not for personal or industrial use."

The cabinet secretary also said that the government did not agree to the request made by international media to lift the fumigation system in the case of import of agricultural products.

Commerce ministry officials said the new import policy has raised the ceiling of sample imports for the ready-made garment industry but those for other export-oriented sectors including shoes and leather goods remain unchanged.

At present, garment exporters can import a maximum of 700 pieces of samples, with 12 in each category. The limits have been raised to 1,500 and 15, respectively.

The existing import policy order imposes a condition requiring manufacturers to ensure at least 20% value addition for all types of knitwear and oven exports. Meaning, in the case of exporting a $100 product, a maximum of $80 worth of raw materials can be imported.

On the other hand, exporters are required to add 10% value to raw materials when the FOB (free on board) price of a dozen clothes is $60 or more. The mandatory value-addition requirement for the export of kids' wear.

The new policy has kept the value-addition requirement unchanged at 10% in exports of knitted and woven clothes when the FOB price is more than $60 but the requirement has been raised to 20% when the FOB price is up to $60. The rate remains unchanged in the export of kids' wear.