What are the challenges facing the bicycle industry?
Bangladesh is fully reliant on the import of raw materials to produce parts necessary to manufacture bicycles, while spare parts are also imported. We can produce 60% of the parts required to make a complete bicycle. Currently, businessmen in the industry pay an average of 55% duty on such imports, which poses a big challenge to the emerging industry. Since the industry is new, a skilled workforce is required to produce quality products in larger volume.
In the near future, Bangladesh will do better in exports as well as in expanding production capacity since Bangladesh is in better position in terms of ease of doing business.
Only the cost of doing business is a little bit higher due to higher interest rates compared to other countries. If the government considers it positively, Bangladesh would take the lead in the global export market.
Can local manufacturers meet local demands?
Though Bangladesh imports bicycles and parts, our installed capacity is good enough to meet local demands. This is because of price factors. Most local users prefer traditional bicycles, not the fancy ones. Some choose cheaper imported bicycles. To provide bicycles at an affordable price for local users, the government should cut the import duty on raw materials as well as parts.
What is PRAN-RFL Group’s future plan for the bicycle industry?
We would like to promote the use of bicycles to the entire country, as it is an environmentally friendly means of transportation, and riding a bicycle is also great exercise.
If the government emphasises the importance of cycling in the interest of keeping environment pollution at bay, urban residents will feel encouraged to use bicycles for their transportation. For this, road infrastructure needs to be developed, with the building of four-lane highways that will help cyclists move freely and safely.
In the near future, Bangladesh will do better in exports as well as in expanding production capacity since Bangladesh is in better position in terms of ease of doing business
Why are Bangladeshi bicycles popular in the European Union?
The quality of bicycles produced in Bangladesh is better and they are also affordable. This is because of the cheap cost of labour and utility services compared to our competitors. The industry shifting away from China is also a great advantage for Bangladesh. There is an anti-dumping duty on China, and Bangladesh has taken the opportunity. In the coming days, the country could be able to lead bicycle exports as our production capacity is increasing gradually.
Do you have a research and development wing to improve quality and meet demands of fashion-conscious users?
Rangpur Metal Industries Ltd has been in the market for the last two years, and has witnessed a double-digit growth. They have a skilled workforce, who takes into consideration the customers’ demands. They work while keeping in mind what a customer would like and at what cost. Based on this, the team improves designs and the quality of bicycles depending on the trend.
What should the government policy support be to boost exports?
Since the cycle industry has enormous potential and can help government plans for product diversification to reduce dependency on single products, the government can lower import duties and provide cash incentives against export.
Furthermore, a tax holiday for new investment may encourage the much-needed investment in the sector. This would help produce most of the required parts locally, reducing import dependency.
Why does Bangladesh Import bicycles?
A small group of cyclists are fond of higher-end products, while most local consumers prefer traditional ones due to lower prices. Since there was a lower domestic demand for higher-end bicycles, production of high-end two-wheelers was not prioritised, and that is why exports are necessary to satisfy fashion-conscious local customers.
But now, manufacturers are considering high-end bicycles as demand is on the rise. The purchasing capacity of potential buyers is growing in line with the country’s steady economic growth, and we are devising plan on how to get bicycles to rural areas at an affordable cost.
Does Bangladesh make high-end bicycles?
As I said, manufacturers are gradually turning to the production of higher-end products, as it would serve both local and international demands.
In exports, manufacturers usually produce cycle as per the design of the buyers. However, now there are innovative designs to draw global buyers as well as locals as the market is gradually expanding. Bangladeshi manufacturers are able to make mid-range products.
In producing higher-end bicycles, a lack of skilled workforce is a challenge while the demand for higher-end products is not very high in the local market. There are only a small number of cyclists that use them. We need a skilled workforce with some specific qualities.
Currently, we are producing bicycles at prices ranging from Tk6,000 to Tk35,000. Expertise is building and we are working hard to develop workforce to meet the buyers’ demands.
What is the export potential for Bangladesh?
Bangladesh has already established a strong foothold in the European market, especially in the United Kingdom. This is because of our quality products and affordable price, as well as our strong commitment to delivering products on time.
As people grow more health and environment consciousness, the use of bicycles will be on the rise.
Why did exports fall this year?
The European Union is the largest destination for Bangladeshi bicycles. The medium of transaction is the US dollar. The Euro has seen devaluation against the USD. As a result, earnings from the sector have dropped, but we are very hopeful about positive growth in the current fiscal year as the EU is recovering from its economic downturn.
Do you think the current environment favours investment?
There are some difficulties, but still we are trying to make good use of the positives that we have.
In Bangladesh, the cost of land and other utility services is comparatively lower than other countries. We also have cheap cost of labour. The workforce is very flexible and can adapt to any new tasks, and if groomed they will become skilled within a shorter period. Despite having some difficulties, Bangladesh is a very suitable place for doing business.