Wait until 2024 for high engine capacity bikes

Highlights:

• Motorcycle Industry Development Policy-2018 will continue until its 5-year tenure ends
• Now, bikes with over 165cc engines cannot be made or imported for the local market
• Bangladeshi manufacturers are allowed to export motorcycles up to 500cc
• The cc restriction is hindering the introduction of better technologies in the local industry

The government has finally decided not to allow motorcycles beyond 165cc engine capacity before 2024, prolonging the wait for bikers to ride high capacity two-wheelers for three more years.

Representatives from the industries ministry, the National Board of Revenue and the Bangladesh Investment Development Authority at an inter-ministerial meeting on 23 February backed the idea of letting the Motorcycle Industry Development Policy-2018 run up to its 5-year tenure, so the existing manufacturers cannot blame the government for policy inconsistency.

They recommended that the cc restriction be withdrawn after November 2023, according to the meeting minutes.  

The Bangladesh Motorcycle Assemblers and Manufacturers Association (BMAMA) has been advocating against the government's move to allow up to 350cc motorcycles on local roads arguing that the existing manufacturers have invested more than Tk8,000 crore based on the restrictive policy and any premature change in policy would distort the market and make their task to secure a breakeven point tougher. 

The association had requested to wait until 2025 to lift the cc restriction. 

BMAMA president Matiur Rahman, also managing director of Uttara Group which is manufacturing Bajaj motorcycles in Bangladesh, told The Business Standard, "When we invested in our factories a few years back, the government told us that the policy [maximum 165cc] would be for five years and the government has now continued it." 

On the other hand, despite being a BMAMA member, Rancon Motorbikes Ltd, manufacturer of Suzuki two-wheelers in Bangladesh, demands that the government withdraw the unique capacity restriction or at least increase the limit up to 350cc initially.

Kawasaki Heavy Industries of Japan and their local partner Asian Motorbikes Ltd, Ifad Group, which had planned to assemble and later manufacture iconic motorbikes by Royal Enfield in Bangladesh, and Bangladesh's motorcycle manufacturing pioneer and the lone exporter, Runner Autos Ltd, have also long been writing to the government agencies concerned, seeking approval to allow high engine capacity bikes on local roads.      

Even BMAMA General Secretary Biplob Kumar Roy's company TVS Auto Bangladesh does not want cc restriction as it is hindering the introduction of better technologies in the local industry. 

"My company and my association are two different entities. TVS supports a market where no advanced technology is restricted," Biplob said. 

However, the meeting proposed withdrawing engine capacity restriction in motorcycle exports even though they agreed that without local road tests, the export potential might remain undercapitalised. 

Police and other government departments can be engaged for road tests of higher capacity motorcycles at this phase, suggested the industries ministry. 

Now, Bangladeshi manufacturers are allowed to export motorcycles up to 500cc, while for the local market, no one can make or import bikes with engine capacity over 165cc. 

The meeting, hosted by the commerce ministry that finalised the import policy for 2021-24 also prescribed the withdrawal of motorcycle capacity restriction after 2023. They have no objection to welcoming investments for strong bike making factories even before their products are approved for the local market. 

That sounds unrealistic, as without a local market, foreign brands that make stronger bikes would find it unattractive to invest in Bangladesh, said Safat Ishtiaq, operations head at Kawasaki Bangladesh. 

Asian Motorbikes has purchased their necessary land at a Chattogram economic zone for Tk30 crore and got ready for investing more than Tk150 crore in making Kawasaki motorcycles. 

Cost of continuing policy distinction

"The decision is not only a matter of sadness, but it will also result in a serious loss of interests from both investors and the consumers," said Safat. 

"This has zero logic in it, absolutely no justification of holding the investments up for 2-3 years. The decision has drawn the industry backwards for ten years," he said as the developing world countries are competing to emerge as a manufacturing hub. 

Taskeen Ahmed, managing director of Ifad Group, told TBS, "There was a great opportunity for Bangladesh to invite fresh foreign investments in the country amid the pandemic. Lots of manufacturers are planning to shift here from China, but due to the government's inappropriate decision, the investments will shift to other countries." 

His company has finalised a plan to invest Tk120 crore for its Royal Enfield factory in Bangladesh. 

Suzuki Bangladesh had its manufacturing plant in 2017 and became the first Japanese brand to begin motorcycle manufacturing in Bangladesh, said Rancon's head of Corporate Affairs Fahim Adnan Khan. 

His company will merely need some additional investments to manufacture high capacity Suzuki motorcycles for both local and export markets. 

He strongly opposed the arguments that higher capacity motorcycles will eat into the existing manufacturers' market, or higher capacity bikes will distort the roadmap for developing a vendor industry here.

Alongside missing out on the opportunity to take the Bangladesh motorcycle industry to the next level, the decision is depriving Bangladeshi motorcycle riders of safe and capable two-wheelers as most safety features are in high capacity bikes, said Fahim.   

The heartbroken riders 

Prior to the early 2000s, there had been no cc restriction in Bangladesh, and many motorcycle lovers had ridden capable bikes on the then less developed roads. 

Bengals Motorcycle Club's President Salek Shahriyar's father was one of them, and Salek now is very fortunate to ride his father's big bike. 

"The riders abroad laugh at us citing our bizarre restriction on motorcycle engine capacity. No country in the world follows such an absurd way," said Salek who travelled many countries only to experience motorcycle riding. 

"It is heart-breaking for us to tolerate the suffocation for a further three years," said Salek, who is a former marketing chief of a Japanese motorcycle brand in Bangladesh. 

He also said the motorcycle cc restriction in the early 2000s was something similar to the erstwhile government's absurd decision not to join the first submarine cable highway fearing "national data theft risk". 

Bangladesh law enforcement agencies had feared that high engine capacity motorcycles might be abused by criminals, and police might fail to chase them on roads. 

"Some irresponsible people popularised many false ideas such as Bangladesh roads are not suitable for strong bikes, strong bikes might cause more road accidents, while as riders we know the truth is completely opposite," said Salek. 

He feels better to hear that none of the coordination meeting participants said anything like this in February. 

Even the secretary to the industries ministry that carried forward the BMAMA pleas in the meeting said higher cc motorcycles are less prone to road accidents. Road transport and highway officials also said for the sake of highway safety, the cc limit can be increased. 

Meanwhile, referring to the police department's recommendations, the home ministry and the road transport authority representatives still argue against higher cc bikes, citing the same point that chasing criminals would be impossible. 

It appears that they ignore the fact that no other country in the world solves the chasing problem in such a restrictive way. 

Runner Group' Chairman Hafizur Rahman Khan, also the president of the Bangladesh Motorcycle Manufacturers and Exporters Association of Bangladesh, believes the deferral to coming out of the cc restriction is synonymous with slowing down the momentum the industry was set to gain. 

His association is one of the applicants for no cc restriction. 

Last December, the Bangladesh Trade and Tariff Commission recommended increasing the motorcycle cc limit up to 350cc to bring Bangladesh out of its unique restriction. 

Hafizur told TBS, "Being the country's first motorcycle manufacturer, we do not see higher cc bikes as a threat to our market, and the government decision is an unexpected development." 

"Let us not plan to come out of the restriction by phases as that will result in some more lost years for the very potential industry," said Hafizur who is widely respected for his policy opinions over the last decade.