Automobile workshops down and out

The automobile workshop business in the country has been hit hard by the coronavirus pandemic as almost one-third of the total workers have lost their livelihoods since the beginning of the pandemic in the country.

Entrepreneurs are struggling to pay workshop rent, salaries of workers and repay bank loans as businesses in the Tk3,500 crore sector have dropped by at least 40% during the last 15 months.

Against this background, to make up losses inflicted by the pandemic, the affected traders have demanded a further extension of their bank loan repayment period and an easing of VAT and tax pressure.

Besides seeking special low interest loans for entrepreneurs of the sector, they also urged the government to fulfill their long-time demand for a separate automobile industrial zone.

Otherwise, they said, it will be difficult for them to survive in this business.

Zahid Ali is one of the affected traders. He has been involved in the automobile workshop sector in Bogura since 1985. He told The Business Standard, "I have become destitute due to corona. In all, I have lost Tk7 lakh during the pandemic. A total of 30 workers, including engineers, mechanics and labourers, worked in my workshop. For the first three months of the pandemic, I regularly paid them all, but then all of them left because I could not pay their salaries."

"I tried my best not to close my workshop, but I left the automobile repair sector as I could not afford the ancillary expenses, including the salaries of staff and rent of the workshop," he said.

He added that people during the pandemic are not repairing their cars unless they are compelled to as they do not have money in their hands. "As a result, we do not have customers. As the income was much less than before, there was no way to bear the expenses. I was unable to borrow anymore, so I left this business."

Another affected trader like Zahid Ali is Rizvi Ahmed. He has been involved in the automobile workshop sector in Chattogram for 20 years. He told TBS, "I had never been in such a recession before. Earlier, we used to repair cars worth Tk2-3 lakh a month, but now we barely repair vehicles worth Tk50-70 thousand. Just before the pandemic, my workshop used to have 40 people working as mechanics, engineers, technicians and labourers. Now all but 14 of them have left because I failed to pay their salaries."

It is not only Zahid and Rizvi, but most workshop businessmen as well who are not able to bear this loss.

Most of the workshops in the capital are at Banglamator, Kakrail, Gabtali, Eskaton, Uttara, Badda, Beribandh, Mohammadpur, Mirpur and Kalyanpur areas. These workshops were once very crowded, but the pandemic has cut down crowd numbers drastically.

According to workshop traders, the district and upazila level workshops have suffered more during the Covid-19 pandemic.

The automobile workshop industry has been struggling for a long time. There is no academic technical training under government management. Those involved in automobile workshops have been demanding an automobile industrial zone since the 1980s, which demand is yet to be fulfilled.

In 2010, Bangladesh Small and Cottage Industries Corporation (BSCIC) undertook an initiative to build an industrial zone of automobile workshops. One industrial zone is supposed to be built around Dhaka and another in Chattogram. But neither of the two has materialised in the last 10 years.

Automobile workshops repair all types of vehicles, including buses, trucks, minibuses, coasters, cars, microbuses, CNGs and taxis, thus keeping the transport system of this poor country running, said Jahangir Alam, general secretary of Bangladesh Automobile Workshop Owners Association (BAWOA)

He said these workshops, set up mainly through personal efforts, have been working for a long time as institutions to build the lives of thousands of neglected workers in the country. From here, a worker becomes a skilled craftsman, fulfills the needs of the country and even gains a reputation working abroad. Much foreign currency is coming into the country. But there is no training centre, no permanent administrative place.

"The government did not provide any financial assistance to automobile workshops. Even though many sectors received incentives during the pandemic, we were not given a single penny," he added.

On April 5 last year, the government announced an incentive of Tk72,750 crore to cover the economic losses brought on by the pandemic. A Tk 20,000 crore incentive package was announced for cottage, small and medium industries. But the automobile workshop sector was not included in the list of recipients of this incentive, prepared by Small and Medium Enterprises Foundation (SMEF), as the sector is not directly involved in production.

Ahsan H Mansoor, executive director of Policy Research Institute, told TBS: "This sector is a potential sector. Some people have become skilled after working in these workshops. Going abroad, these skilled automobile workers are sending a good amount of remittances. The business has suffered a lot during the ongoing pandemic, and there is a risk of further losses in the coming days."

"During this global disaster of the corona pandemic, it is not appropriate to deprive the traders and workers of this sector of government incentives by arguing that they are not directly involved in production, they just repair damaged vehicles," he said, adding, "The government should provide financial incentives to the sector like it does to other sectors. Otherwise, it will suffer more."

According to the BAWOA, there are about 30,000 workshops across the country. Of these, about 22,000 are registered with the association while the remaining 6,000 are scattered all over the country. There are about 3,500 in Dhaka city alone. The amount of investment in this business in the whole country is about Tk3,500 crore. Most of the traders are now in dire straits due to the ongoing lockdown and additional taxes.

According to the association, at least three lakh people are involved in this sector. In the pandemic, 30% of them have lost their jobs.

BAWOA President Ariful Islam Mina told TBS, "This business has suffered huge losses during the pandemic. About 50% of entrepreneurs have bank loans. Business at most of the workshops has dropped by about 40%. In all, the sector has incurred losses worth Tk1,000 crore during the pandemic. About 400 to 500 traders have sold their workshops, closing down the business as they could not bear the loss."

"At present, automobile repair services have to pay a total of 16.5% value added tax. The government is increasing the amount day by day, but the expected technical training, technical assistance and financial assistance are not being provided at all," he added.

He demanded a further extension of time for the repayment of bank loan installments on an emergency basis and reduction of taxes imposed on the industry.

He also emphasised building the promised automobile industrial zone for the development of the sector in the long run. Compared to other organized sectors, loans have to be disbursed at much lower interest rates to small and medium entrepreneurs of this sector, he said.