Wanted: Tk 2,600cr
The global coronavirus pandemic has left no sector unscathed and stopped hardly any businesses from turning to the government for a pie of the stimulus package announced to mitigate the economic fallout.
Now, it is the motorcycle manufacturers and assemblers who are seeking Tk 2,060 crore in financial support from the government.
Of the support, Tk 2,000 crore is being sought from a Tk 30,000 crore stimulus package the government is offering to affected industries and service sector companies as working capital at 4.5 per cent interest.
The remaining Tk 60 crore is being sought at 2 per cent service charge for staff salaries to be paid over the shutdown period, which is expected to last for around three months.
Motorcycle sales had leapt to about 5 lakh units in 2019 from 1.5 lakh in 2017 with the aid of duty reductions facilitated by the government at the import stage.
This is said to have prompted market players to invest about Tk 8,000 crore, creating direct and indirect employment for around two lakh people.
The sector helped generate about Tk 2,000 crore in duties, taxes and VAT and about Tk 1,000 crore as registration fees in fiscal 2018-19.
There are 10 brands of motorcycles, namely Runner, Hero, Bajaj, Honda, TVS, Yamaha, Suzuki, Benelli, Zongshen and Lifan, being either manufactured or assembled in Bangladesh.
The sector could not make any of the Tk 600 crore in expected sales in April, Hafizur Rahman Khan, president of the Motorcycle Manufacturers & Exporters Association of Bangladesh, told The Daily Star.
To sail at full mast, like during last year, the motorcycle industry will have to absorb a loss of expected sales of about Tk 2,000 crore, he said.
All the manufacturers and assemblers are paying salaries and other benefits to employees from their capital as there is neither sales nor production, according to Khan.
It will take at least two years for the sector to balance out its fixed expenditure for the shutdown period.
"We already submitted a proposal to the government for providing support to us to tackle the crisis," he added.
Despite the revenue loss, the sector will announce no layoff, said Matiur Rahman, president of the Bangladesh Motorcycle Assemblers and Manufacturers Association.
He demanded that the government waive value-added tax and reduce registration fees for customers and refrain from imposing advance income tax on the industry for at least six months.
The registration costs average Tk 22,000, which is about 25 per cent the price of a 100cc motorcycle, the engine capacity that sells the most, according to Rahman, also the chairman of Uttara Motors.
The registration cost should be reduced to make motorcycles affordable to customers and enable the growth of the industry.
"For the ongoing economic crisis, we think that the motorcycle industry will face a sharp fall in demand by 30-40 per cent due to a significant drop in the purchasing power of people."
He further apprehended that the masses might not be even able to afford motorcycles while the manufacturers maintain factories.
At least 60,000 motorcycles have remained unsold in the past two months for the ongoing crisis, Rahman said.
Motorcycles enable low-cost travel for short distances but the current prices make it difficult for the masses to afford one, said Himihiko Katsuki, managing director and chief executive director of Bangladesh Honda Private Limited.
The registration cost, which includes road tax and other charges, is almost four times the amount charged in neighbouring countries, keeping the prices high for consumers.
However, all the manufacturers are putting in their best effort to bring down the motorcycle prices, he added.
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