The Ministry of Industry has recently asked the National Board of Revenue (NBR) to give tax benefits for the production and assemble of motor cars in the country. Such tax benefits would lower the price of automobiles significantly, whether it is assembled or manufactured, compared with imported cars.
Local newspapers reported that the ministry asked NBR to award tax benefits to local production and supply stages and on the import of raw materials and spare parts for the automobile industry. We hope such a business-friendly policy with reasonable tax benefits will attract both domestic and foreign direct investment in the sector. But unfortunately, the local producer has been facing uneven competition in marketing their products due to the existing duty structure which heavily favours car import.
What we also see is that the state-owned Pragati Industries has never been a profitable venture since its birth after the country's independence. Even in 2017, the government increased supplementary duty on completely knocked-down (CKD) cars which put a bar on the competitiveness of the local automobile industry. By increasing supplementary duty, car import was encouraged instead of locally assembled vehicles. Whereas countries like Thailand developed their local automobile industry by keeping the import duty on spare parts much less than that for completely built cars and introducing other incentives. In India, the local automobile industry has given huge taxes and other facilities for expanding business. The giant Indian airmobile manufacturers are now building new cars in collaboration with globally renowned companies, such as Toyota, Suzuki, Honda, Mazda and others.
We must say, Bangladesh should not be a dumping ground of foreign reconditioned or low-priced economy cars. Apart from relaxing the tax burden, at the same time, other barriers also should be withdrawn to help the local automobile industry to stand independently on its own feet.