Easy loans drive car imports

Chittagong Port premises are crowded with imported cars. Photo: Zobaer Hossain Sikder

Easy car loans for officers and employees in the private sector corporate world, including banks, have considerably helped recent car imports surge, according to a central bank report.
In addition, a section of the society that holds a large chunk of black money is also fuelling the car market growth.
Currently, the Chittagong port premises are crowded with 5,500 cars, while 1,000 more are aboard different ships.
As many as 25,000 cars were imported through the port in the last eight months, while the figure was 13,000 during the previous eight months, the Chittagong port data says.
The Bangladesh Bank (BB) report filed in early September shows $78 million letters of credit (LCs) settled by importers in the May-June period, while the previous year witnessed $35.84 million LC settlements for car imports.
Usually, the two-month period is the peak time for importers.
The report also pointed out that most of the LC this time were opened before June 30, as the importers feared the current budget (FY 2008-09) would propose a rise in duties on motor vehicles.
The budget indeed restructured supplementary duties on cars by 60, 100, 250 and 350 percent depending on the horsepower. The previous duty rates were 20, 35, 65, 100, 250 and 350 percent.
The redefinition of 'reconditioned' car might be another reason for the increased car imports. The budget defined that a reconditioned car would be at least 365 days old. But before June 30, the definition of a reconditioned car was at least 120 days old. This definition encouraged traders to import almost brand new cars.
But the up-trend is mainly triggered by car facilities offered to mid-rank officers in the corporate world. The number of mid-rank officers is huge. The corporate offers include easy loans and large sums of car maintenance remuneration.
"Demand for cars has gone up in the last few years," the central bank report further says.
According to the Bangladesh Road Transport Authority (BRTA), until 1999, Dhaka had registered around 96,000 cars and in the following eight years until 2007, another 1.10 lakh were added.
Bappi, a small car dealer, finds his business running well on the rise in the number of buyers from banking and large private companies.
"Even teachers of the private universities, coaching centres are now buying cars because the lending facilities are good. Cars are also considered safe transport system in the present society," he said
The numbers of importers in Bangladesh and exporters in Japan have increased in recent years. Japanese exporters are typically Bangladeshi expatriates, Bappi pointed out.
The CNG conversion facilities offering a cheaper fuel alternative have also stimulated the car market. Most of the imported cars are from Japan. Car traders say Toyota Corolla tops the foreign cars in popularity, with prices ranging between Tk 8 lakh and Tk 20 lakh.