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15 July, 2018 12:35:46 AM
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Promising prospects in bicycle industry

SHARIF AHMED
Promising prospects in bicycle industry

In 1999, Bangladesh started exporting bicycles to the European market and the exports fetched around USD 10 million the following year. After 19 years, the annual export of bicycles has risen to USD 81.34 million.     

Entrepreneurs say Bangladesh has the capacity to easily increase its market share in the global bicycle exports by making domestic preparations, given the scope in the Western market. Investors need support, especially a conducive environment for the growth of the sector.

They also say that the country has the capacity to earn nearly Tk. 1,200–1,500 crore from bicycle exports within a couple of years, if the import duty on raw materials is reduced. The global bicycle market is around USD 60 billion a year at present.

Bangladesh produces around 15 lakh bicycles per year. Nearly 10 lakh of these are exported, entrepreneurs said.  

Mizanur Rahman, former president of the Bangladesh Bicycle Merchants Assembling and Importers Association, said accessibility of labour with reasonably low wages and latest technology give Bangladesh a competitive advantage over other countries, such as Taiwan, China, and Europe, in manufacturing bicycles.

Higher wages in China, which has been the largest bicycle sourcing country, has shifted the focus of sourcing of bicycle making to countries like Bangladesh. “So, this is an opportunity for us to explore the global market and address its demand by taking compulsory steps. We need consistent policy support for that,” he said.

Bangladesh’s bicycle industry, an emerging export sector, has huge potential in the global market, as export earnings are growing by around 5 per cent a year.  

According to the Export Promotion Bureau (EPB), during the first eleven months (July–May) of the 2017–18 fiscal year, Bangladesh earned nearly USD 81.34 million by exporting bicycles, especially to the EU market. During the same period in the 2016–17 financial year, the earnings totaled USD 77.86 million. The growth rate is approximately 4.47 per cent compared to the previous year.

As of 2016, Bangladesh had a market share of 11 per cent in the bicycle industry in the European Union (EU) countries and the country is the third largest exporter, said Rahman.

 Rahman said the growth rate of bicycle use in the domestic market has been 30–35 per cent in recent years. The demand of the local market has increased to 12 to 15 lakh per year.      

Rahman added: “Bangladesh cannot produce all types of parts needed for manufacturing a complete bicycle. The country has to import parts and raw materials.”

Citing an example, he said raw materials like frame, tyre, rim and spoke are all manufactured locally. Derailleur gears, known as cycle’s gears, are imported.

He said the industry has been facing challenges like higher import duty on cycle components, infrastructure problems and a dearth of foreign investment. Besides, an investment-friendly atmosphere for local investors must be ensured for accelerating growth in the industry.

Explaining the obstacles, he said import duty of per kg raw materials has increased to USD 1.5 from USD 1, which will definitely affect the price of the bicycle. “We import most of the bicycles from India and China,” he said.                                     

 When asked about the price, he said it ranges from Tk. 8,000 to Tk. 9,000.     

 Bangladeshi bicycles are exported to 18 countries, including the UK, the Netherlands, Germany, Italy, Greece, Ireland, Belgium, Denmark, Australia and Portugal.

Bicycles are an eco-friendly mode of transportation. Import tariff on bicycles should be reduced to encourage the environment-friendly two wheelers, he urged.

Electric bicycles will be the future’s demand as the world embraces more environment-friendly transport, he said.

 Kamruzzaman Kamal, director of marketing of the Pran-RFL Group, told The Independent: “After meeting the buyers’ requirements and standards, Bangladesh is now producing high-quality bicycles and meeting the export market's demands because our capability and quality have increased to produce high-quality bicycles.”

 Suppliers of bicycle parts and components in Bangladesh historically have been exclusively oriented towards the local market, but the scenario has changed in a couple of years. In 1995, Bangladesh started exporting bicycles and since then gradually it has been growing, he said.   

 When asked about the production capacity of the RFL, he said: “We’ve built two manufacturing plants at Habiganj district in Sylhet division. One plant manufactures local products, and the other is engaged in producing export-oriented bicycles.”      

Both the manufacturing plants have the capacity to produce approximately 700,000 units of bicycles annually, he said.

Talking about one of their favourite brands, he said: “We started producing bicycles named ‘RFL Duranta’ in 2014. Now, we export ‘Duranta’ to countries such as the UK, Germany, the Netherlands, Canada and other European countries.”         

 The price varies between Tk. 4,500 and Tk 70,000, depending on the models, he informed.      

Elucidating some challenges, he said: "Seventy per cent bicycles are imported, and only 30 per cent are manufactured locally. So, the market is still import dominant and most of the cycles are coming from China and India.            

 Higher import duty on raw materials is another barrier that needs to be addressed. Previously, it was 10 per cent. It has increased to 25 per cent from this year, he said.    

 The RFL manufactures 65 per cent of the raw materials, such as frame, tyre, rim and spoke, and 35 per cent are imported and sourced from abroad, he said.  

 “The bicycle industry is a growing industry. We have the capability to produce high-end bicycles for the local market. But the customer demand is not very high for the high-end product in the local market,” he added.

 Currently, more than 6,000 workers are employed in factories that export bicycles, he said.

 "The Meghna Group first began exporting bicycles. Now, a couple of companies are there that are engaged in bicycle manufacturing, targeting both the exports and local markets,” said Habibul Islam Jahid, distributor and owner of Cycle Heaven.  

 When asked, he said: "Velco and Prince bicycles have the most demand in the market at present. The price ranges from Tk. 3,600 to Tk. 32,000.      

 Habibul Islam also said: “The use of bicycles has been increasing rapidly in Bangladesh because of traffic snarls in the capital city and increased awareness about healthy lifestyles. Bangladesh basically depends on import of raw materials to produce parts which are essential for manufacturing bicycles. So, we have the capacity to produce around 60 per cent of the parts entailed to make an entire bicycle. Higher import duty is the main challenge at present.”              

 According to the data of the Export Promotion Bureau (EPB), during the first eight months (July–February) of the 2017–18 financial year, the UK imported the highest number of bicycles, worth USD 28.88 million, while Germany imported bicycles worth USD 10.08 million, followed by Denmark (USD 4.05 million), India (USD 4.14 million) and Belgium (USD 3.29 million.)

EA

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Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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