The future of electric vehicles in Bangladesh

The industrial revolution is going on in full scale on the Asian front. Combining technologies from the western market with a growing and efficient pool of workers, Asia is now at the forefront of global development through production and supply. 

Thus, it is not surprising that we saw some incredible growth cases in this region in the past few decades--those including China, India, Japan, South Korea and Malaysia. This Asian experience has also shown a boom in electric vehicle development in this region.

With 2020 past us, the new Asian tigers are looking to implement these case studies in their own policies as well, with one notable country being Bangladesh. Bangladesh's large pool of workers, growing consumer market and close proximity to major supply chains with a GDP growth of over 7.3% in the first quarter of 2020 – makes it a lucrative market ripe for development. 

Automobile sector is catching on as well. Bangladesh's growing population and an increasing purchasing power coupled with the government's concern regarding environmental issues makes it a viable hub for this technology.

With a growing economy and a need for convenient transportation – the automobile industry has long been rising in Bangladesh. The demand for private cars is also growing despite high taxes and maintenance costs. 

A large number of often unlicensed public transportation, locally known as Tom Toms, are electric battery powered, with numbers going up almost 7.28% according to the figures provided by BRTA. 

This growing market has drawn the attention of the Bangladesh government as well, with a draft Automobile Industry Development Policy proposed in 2020. Core concerns for the Bangladesh government seem to be the energy consumption, environmental impact and stakeholder benefits to sustain the market.

In the Draft Automobile Industry Development Policy, Bangladesh government provides a few promising insights regarding electric vehicles. It has shown a keen interest in providing "Policy support and preference" to electric vehicles directly from the initial stage of development. 

Further emphasis is given on strategy six in promoting research and development on electric transportation and key components such as battery and charging stations. This is crucial in providing access to electric vehicles and components in the country and promoting development in the sector. 

A proposal for setting up a "Technology Acquisition Fund" is also made indicating the government's will to invest in the sector and provide easier access to technology to local manufacturers requiring the assistance. 

The overall zeitgeist of the new government policy seems to be looking towards local manufacturing and relying less on imports, which is in stark contrast to Bangladesh's current situation with the lion's share of parts and vehicles being imported from outside. 

The high import costs, designed to promote local manufacturing, are to be put to use to ensure competitiveness of the local market in accordance with past trends. Bangladesh's geographic position and temperature rise also puts Bangladesh in the high risk zone regarding climate change, which has led to Bangladesh taking a strong stance on climate change and upholding that is also aiding the push for electric vehicles in this country.

With this potential, Bangladesh is already attracting various state and private entities in this field. Bangladesh recently invited Volkswagen to consider setting up Electric Vehicle plants in Bangladesh. 

Salman F Rahman, the private sector, industry and investment adviser to the Prime Minister also stated that Bangladesh is willing to provide land and resources for the development of electric vehicle manufacturing in this country. 

This goodwill seems to be paying off, with various companies from home and abroad being interested in investing in this project. Omega Seiki, a member of the India-based Anglian Omega Network, plans to invest Rs100 cr (Tk 116 crore) in setting up electric vehicle development projects in Bangladesh. 

Ricardo-AEA, a UK based energy and environmental consultancy firm, supported by Infrastructure Development Company (Idcol) is working on investing funds from the United Kingdom government in this sector to ensure steady investments. 

The Automobile Industry Development Policy promotes research and development on electric transportation and key components such as battery and charging stations. Photo: REUTERS

Energy supply companies are also eyeing an opportunity due to the rising demand of this sector including the private energy companies. Local manufacturers like Nitol-Niloy Group with decades of experience in automobile manufacturing and sale in Bangladesh and consultancy firms like LightCastle partners are working on developing the local market in collaboration with foreign investors and technology firms. 

With logistical and financial incentives from the Bangladesh government, these companies are working on promoting better tax code for the import of parts, better investment prospects, local logistical support, promoting greenfield and brownfield investment in local relevant sectors and establishment of local manufacturing and delivery chains to maximise output.

This incredible potential requires an adequate response in the form of government regulation. Standardisation and transparent regulatory authorities shape the path for development in any field and it requires all sorts of steps ranging from bureaucratic reforms on local levels to international collaborations on standard protocols. 

The highest levels of regulations followed are the international protocols ratified by the Bangladesh government, regarding the harmonisation of Motor Vehicles adopted by the United Nations in 1958, 1997 and 1998 to provide a regulatory framework for the standard testing of all motor vehicles. 

These UN Agreements are essential in standardising the emissions, safety and compatibility standards of the vehicles to ensure a safe consumer experience and the prospect of exporting the vehicles to the global arena without facing compatibility issues. 

Bangladesh also seeks to control export and import through imposing restrictions on importing completely built units. Government Environmental agencies and ratified environment treaties are also a key motivating part in this field. 

Tax reforms to provide tax incentives for auto manufacturers is also in order to ensure better taxation and profitability for the new industry. Government restrictions on the market are also expected to be lifted in later phases to ensure international competitiveness and provide an opportunity for exporters. 

Various international investment portfolios also require constant connections for stable progress to be made, requiring industry leaders and manufacturers to be supported by the diplomatic capacity of the state apparatus. 

All this requires a vast amount of co-operations from different ministries including the Ministry of Industry, Ministry of Finance and The Ministry of Foreign Affairs. Regulatory needs of the foreign investors and manufacturers are also to be kept in mind in accordance with the draft plan.

The possibilities in the field of electric vehicles in Bangladesh is immense. Developing industrially while taking care of the environment is essential, and electric vehicles provide that exact opportunity. 

Bangladesh's interest and preparedness to pre-empt and combat the issues as well as collaborate with private and governmental interests seem solid enough, although only time will tell what the end result will be.

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.