Motorcycle industry again demands registration fee cuts
Motorcycle assemblers and manufacturers have again demanded a reduction in registration fees in the final budget so that the industry can recover from the economic losses induced by the pandemic of COVID-19 and contribute more to the GDP.
The government has not addressed their demands in the proposed budget, rather imposed an additional 10 per cent supplementary duty on registration of motorcycles.
The Bangladesh Motorcycle Assemblers and Manufacturers Association (BMAMA) placed their demands before the National Board of Revenue (NBR) on Monday.
Amid the ongoing economic crisis, the motorcycle industry will face a sharp fall in demand by 30 to 40 per cent due to a significant drop in purchasing power of people, according to the assessment of the platform.
Mass people will not be able to afford motorcycles and the manufacturers will not be able to keep factories as well as the sales network unaffected, ultimately resulting in mass job cuts.
"Therefore, we would like to request an immediate reduction of registration fees, road tax, supplementary duties and other charges on an average total of Tk 4,000 against per unit of motorcycle," said Matiur Rahman, president of the BMAMA.
Registration costs are now on an average Tk 22,000, which is about 25 per cent of the price of a 100cc motorcycle, the engine capacity that sells the most, according to Rahman, also the chairman of Uttara Motors.
Earlier, the BMAMA placed the same demands for reducing registration fees and supplementary duty right before the budget was placed in parliament.
Rahman said such initiatives would help increase the demand of motorcycles, enabling the industry to survive and save jobs.
However, the BMAMA appreciated the promulgation of the "Motorcycle Industry Development Policy 2018" which aims to increase the sector's contribution to the GDP from 0.5 to 2.5 per cent by 2025 and facilitate the establishment of a world-class motorcycle industry in Bangladesh.
"For the ongoing economic crisis caused by COVID-19, 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," Rahman apprehended.
The government imposed 10 per cent supplementary duty on total fees in the FY2019-20 budget which increased the cost of motorcycle registration process, as per Value Added Tax and Supplementary Duty Act 2012.
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.
The industry forecasted growth of at least 20 per cent in FY2020, which has now become a far cry due to the pandemic.
Annual motorcycle sales were set to be around 6 lakh units by the end of 2019 thanks to price cuts, increasing purchasing capacity and thrust for faster mobility.
The market began to expand fast from fiscal 2016-17, when the government slashed the supplementary duty by 25 percentage points to 20 per cent on the import of the two-wheeler's components to encourage domestic manufacturing.
The high hopes are said to have prompted market players to invest about Tk 8,000 crore, creating direct and indirect employment for around two lakh people.
Rahman said the motorcycle industry contributed around Tk 2,000 crore as duty, tax, and VAT directly every year. Besides, the government has the opportunity for earning additional revenue of around Tk 1,000 crore from registration fees.