Stable policy key to a thriving motorcycle industry

The relationship between Japan and Bangladesh is a trusted and time-tested one. Bangladesh became Japan's biggest recipient of official development assistance in 2020. Since the Covid-19 pandemic started more than a year ago, there has been a lot of talks and anticipation about Japanese businesses moving base to Bangladesh. In a series of high-profile interviews, The Daily Star tries to understand the increasing interest of Japanese investors in Bangladesh, its growth prospects, barriers to growth, ground realities, and how to attract more Japanese investment. As part of a series, today, we are running the interview of Himihiko Katsuki, managing director and chief executive officer of Bangladesh Honda Pvt Limited. In his career spanning 20 years, Katsuki has had ample experience working in the motorcycle industry, including at Honda Motor Japan Co, Honda Motorcycle & Scooter India Pvt Ltd, and Honda Vietnam Co Ltd.

DS: Can you brief us about Honda's journey in Bangladesh?

Katsuki: After World War II, the application of auxiliary engines to bicycles, which made it easier for people to move around and transport goods, spread quickly in Japan. The Honda Super Cub, introduced in Japan in 1958 to provide even greater convenience to people's mobility, has been sold in more than 160 countries, becoming the most popular two-wheeler globally.

Atlas Honda (Pakistan) started a factory in Tongi in erstwhile East Pakistan in 1966. After Independence in 1971, Atlas Honda Bangladesh became the distributor of Honda Motor Co Ltd (Japan).

Bangladesh Honda Private Ltd was established in a rented CKD (completely knocked down) assembly factory in Gazipur in December 2012 to contribute mobility to Bangladesh society and industrial development.

In 2018, Bangladesh Honda inaugurated a manufacturing factory in its own land situated at the Abdul Monem Economic zone in Munshiganj.

DS: is the government prioritising the motorcycle industry in Bangladesh? Is the policy helping the motorcycle industry in Bangladesh?

Katsuki: It is indeed a great pleasure that the government has decided to develop the motorcycle as a prioritised industry, considering its potential to contribute to economic development and people's convenience.

The government approved the 'Motorcycle Industry Development Policy 2018' to raise its contribution to the gross domestic product from 0.5 per cent to 2.5 per cent by 2025, facilitates a world-class motorcycle industry, and increase the number of the people employed in the sector from 5 lakh now to 15 lakh by 2027.

We want to express our sincere appreciation to the National Board of Revenue for issuing the statutory regulatory order (SRO) on May 29, 2018, and its further amendment on March 18, 2019. Under the SRO, there are two types of manufacturing categories. Category-1 deals with chassis and manufacturing from raw materials. Category-2 deals with chassis and manufacturing from structured parts. 

A stable policy is one of the key factors for the technology-driven industry. We greatly expect the policy will be stable for a long time as we have already invested and developed skilled employees in certain areas based on it.

DS: What is the manufacturing status of Bangladesh Honda Private Ltd?

Katsuki: In compliance with the SROs, currently, we are registered under Category-1 for two models and Category-2 for three models. Moreover, we are assembling the engine from more than 200 parts as per Honda standard and quality. It's the step for localisation.

DS: Honda is a world-renown brand, and its price is competitive. How is Honda contributing to price reduction?

Katsuki: We contributed to developing the motorcycle industries in many countries, including Thailand, Indonesia, Vietnam, the Philippines, India and Pakistan, through our manufacturing experience. And considering the massive potential of Bangladesh's motorcycle market, Bangladesh Honda prepared the roadmap "Proposal for Industrialisation of the Motorcycle Business in Bangladesh" with the cooperation of our headquarters and submitted it to the industries ministry in 2015. We are delighted that the government took our proposal seriously, and with the introduction of various policies since then, the motorcycle industry is on the growth track.

Bangladesh Honda injected Tk 460 crore as an investment. We always focus on industrialisation, and gradually, we are graduating from CKD to manufacturing Category-2 and Category-1.

We are reducing the price by localisation with support from the government. Now, the motorcycle has turned into a necessity rather than a luxury item. The price of Dream 110, one of our core models, has gone down from Tk 149,000 to Tk 89,900 within five years. There has been a 40 per cent price reduction.

DS: What is the contribution of BHL to employment generation?

Katsuki: Industrialisation opens the door to many employment opportunities that come with in-house skill development. In this context, we are not only creating job opportunities, but we are also transferring the technical knowledge and skills to our associates. Overseas technical expatriates, especially Japanese people, come here and provide on-the-job training to our employees to ensure Honda's standard. We have already transferred advanced technology to assemble the engine, alongside pressing, welding and painting.

Apart from direct employment at BHL and dealers, there is a rapid increase in indirect jobs at suppliers, logistic service providers, parts retailers, and local mechanics.

I must mention that the quality of the workforce in Bangladesh is great. They are sincere and enthusiastic. With the great effort from our local associates, we will generate more and more jobs in the future.

DS: What needs to be done to attract investment and support the growth of the motorcycle industry?

Katsuki: Motorcycle manufacturing policy and relevant regulations must be stable for a certain period. Frequent policy changes will create complexity in manufacturing operation and volatility in our investment plan.

For example, if we decide to invest in some expensive machinery to make parts locally, but imports of the parts are allowed later through policy changes, it will simply be a waste of investment and push up the cost. As a result, the price of a motorcycle will be higher. If such happens, it will be an obstacle to the sustainable growth of the industry. Therefore, a stable industrial development roadmap and reasonable duty structure will encourage manufacturers to invest in the sector. Subsequently, sound policy and facilities for the local suppliers and vendors development for motorcycle parts will help manufacturers offer good quality products at a reasonable price.

DS: How is Bangladesh Honda Private Ltd supporting the community, especially in safety riding, during these unprecedented times?

Katsuki: Bangladesh Honda believes "safety enables people to spread their wings." As a commitment to society, we are offering free riding training to riders for road safety. We have already introduced a dedicated safety riding department in our organisation to help our customers ride their motorcycles safely. We have trained our staff to ensure correct know-how is conveyed to customers.

During Covid-19, a higher number of people are buying motorcycles compared to the past. For them, we are expanding our road safety activities so that they can ride safely.

DS: What's the future of the company?

Katsuki: Honda's Global Vision for 2030 states: "Serve people worldwide with the joy of expanding their life's potential" and "Lead the advancement of mobility", and "enable people everywhere in the world to improve their daily lives". Honda's strength is in its ability to offer products and services filled with passion and present quality and technology to customers that are ahead of the time. We will do our best to contribute to the development of the nation by developing the local manufacturing industry, improving the mobility of the daily commuting of masses, and spreading Honda's global experience.

DS: What is the potential of the industry in Bangladesh?

Katsuki: The motorcycle industry has an outstanding potential to play an important role in Bangladesh's quest for industrialisation. The impressive growth of the sector over the past decade testifies to this reality.

In the last couple of decades, the motorcycle sector has supported the growth of many economies in the Association of Southeast Asian Nations and South Asia. The potential to demonstrate this more dramatically and impressively exists in the context of Bangladesh.

To this end, we will establish a business that has resilience against changes in our business environment. We will speedily implement the large-scale operation. We will continue to work aggressively for industrialisation.

In the last couple of decades, the motorcycle industry has supported the growth of many countries, and Bangladesh can replicate it.