The Finance Ministry has been asked by the Prime Minister’s Office to submit a detailed report on the 1600 cc cars and whether they could be split in three or more categories so that the middle-income class people can afford small vehicles.
This announcement came as a response to the booming automobile sector in the country. Ever since the lockdown was lifted, the economy has been recovering and having a boost in growth, and that is only possible due to the favorable economic conditions after the lockdown period.
Now, in order to promote more economic growth, the Government has made very favorable economic policies for all the economic sectors, including the automobile sector. The automobile sector in Bangladesh is booming and this is driving more and more demand for vehicles among the masses.
The main reason for this demand lies in the construction of highways and the Padma Bridge. This bridge has connected the capital, Dhaka, to the western parts of the country, reducing the distance in between the territories. Due to this reason, there is an increase in the demand for vehicles in the automobile sector.
Taking advantage of this situation, the government has come up with a plan to facilitate the middle earning groups of the country to buy themselves small cars, this will in turn improve the image as well as increase the growth rate of the automobile sector.
In order to attract foreign investment, the government announced tax rebates on the purchase of locally made cars as well as cash incentives on the export of locally assembled or manufactured cars and other automobiles.
Local car manufacturer Uttara Motors Ltd as well as other Indian automobile manufacturers including Tata Motors, has invested a huge deal in the automobile sector of the country, since in Bangladesh, local manufactured cars are preferred more than the foreign cars.
In addition, this is a good opportunity to invest in the local automobile manufacturers, which is exactly what the investors are doing right now.
According to the Bangladesh Road Transport Authority (BRTA), almost 4 to 4.5 million cars were registered in the past year and this demand has been increasing since 2014.
Due to the pandemic, in between 2019 and 2020, the sales of the vehicles dropped a little, but gained back their momentum the moment the lockdowns were lifted.
The recent increase in the demand for cars is a good sign for the economy but a bad sign for the environment.
And, even though it appears to be a good sign, due to the rising demand for personal vehicles like cars, the demand of buses and three-wheelers is decreasing, indicating that people are becoming more inclined to have their own personal vehicles instead of using the public transport.
This will burden the economy with more imports of oil into the country, thereby increasing the inflation, since Bangladesh is a country that relies on imports. This decision of the government may return with severe consequences in the near future for the country.
