The demand for four wheeled vehicles is expected to continue growing rapidly in Bangladesh.
- Low penetration ratio of 6 per 1,000 population indicates potential for further growth.
- Growing middle-income population: Sustained economic growth over the last decade has enhanced consumers’ purchasing power and affordability, leading to the rise in demand for consumer durables. According to the Boston Consulting Group, 30 to 40 million people will join entry-level middle-income class by 2025, while another 34 million will move to a higher middle-income bracket, enabling them to reach a higher standard of living.
- Increasing manufacturing and infrastructural development activities is leading to increased demand for commercial vehicles. Logistic and construction industries have been the largest sources of demand, benefiting from the growth of export-oriented industries, trading activities, and many on-going infrastructure projects.
Assembling and manufacturing
The government is encouraging building of semi knocked down (SKD)/ completely knocked down (CKD) assembly/ manufacturing plants for commercial vehicles, passenger vehicle including EEV for domestic market in the country through the generous fiscal incentives and tax holidays.
In addition, the newly developed automobile policy 2020 proposes additional export subsidies along with tax benefits and concessional loan benefits to purchase locally assembled vehicles. Besides, the existing higher import duties associated with CBU import provide a ground for stable local production during the developing stage of the industry.
Parts/ components production
Manufacturing of parts and components is also one of the key agendas of the National Automobile Policy 2020. Generous tax holidays and fiscal incentives are provided to encourage the development of the segment.
Check incentives link : Sector specific
Sector Specific Incentives and policies
Income generated from automobiles (three and four-wheeler) made in Bangladesh will be exempted from tax for first 10 years of production and will enjoy reduced tax rate for the next 10 years
Automobile/automobile parts components manufacturing entities that are established between July 1, 2019 and June 30, 2024 are eligible for phased or partial tax exemption for 5 to 10 years depending on the location of their businesses.
- Encourages local assembly and manufacturing through tax holiday and fiscal incentives and favourable import duties
- Provides export subsidy
- Development of sound domestic market for brand-new vehicles.
- Development of local parts/ components production through progressive localization plan.
- Promotion of R&D and development of design and testing functions.
- Formulation and enforcement of vehicle standards (quality, safety and emission).
- Development of industrial human resources.
- Improvement of business climate specific to automobile industry.
- Automobile Component and Accessories Manufacturers Association (ACAMA)
- Bangladesh Automobile Assemblers & Manufacturers Association (BAAMA)