Asian Motorbikes Ltd, the distributor of Japanese Kawasaki motorcycles in Bangladesh, has been allowed to locally manufacture motorcycles with up to 500 cubic centimetre (cc).
The industries ministry approved the second such nod for big bike manufacturing plants in the country, to Asian Motorbikes on Sunday.
Earlier, the government approved Ifad Motors to manufacture Royal Enfield bikes in October last year.
The move comes amid growing market demand for stronger motorcycles and an increasing interest of two-wheeler investors. The government is also amending its import policy order, which currently bars any import of motorcycles having over 165 cc engine, and their parts or raw materials.
According to the draft of the upcoming order, raw material and parts to locally manufacture up to 500 cc motorcycles can be imported into the country. However, completely built bikes over 165 cc engines cannot be imported.
Motorcycle manufacturers welcomed the much-delayed government moves to come out of the bizarre restriction on motorcycle engine capacity, which is only seen in Sri Lanka other than Bangladesh.
But, confusion remains regarding local road permits for 500 cc bikes and which is yet to be reformed.
Biplob Kumar Roy, chief executive officer of TVS Auto Bangladesh, the second-highest seller of two-wheelers in the country among the Indian makes, told The Business Standard, "The answer of the question regarding local market sales should be clear before we invest in manufacturing facilities for higher cc bikes."
Safat Ishtiaq, head of operations of Asian Motorbikes, on the other hand, thinks that if the import policy order sticks to its draft, local market sales would be possible there as soon as the approved companies can launch locally manufactured higher cc bikes.
"Having a great degree of assurance from the government regarding local road permits we decided to pursue the plans for investment in the factory and technical collaboration with our principal Kawasaki Heavy Industries of Japan," he said.
"We are waiting for the draft import policy order to be finalised and published, before entering the collaboration agreement," he said.
He believes the import policy order is the key that has been dictating the relevant state authorities' stance regarding motorcycle capacity, registration, and road permits.
When the import policy order increased the motorcycle cubic capacity limit to 165 from 155 four-five years back, nothing else was needed for the BRTA to register the bikes.
However, industry executives said, investments in manufacturing bikes with higher cubic capacity solely for export is not feasible in Bangladesh as the manufacturing ecosystem is still far from being competitive, in comparison with the regional two-wheeler export giants including India, Thailand and Indonesia.
Bangladeshi factories can achieve competitiveness only after they thrive in the local market, they said.
Safat Ishtiaq said Asian Motorbikes has secured a 10-acre industrial plot at Bangabandhu Sheikh Mujib Shilpa Nagar in Chattogram.
The company aims to go into production by mid-2023.
Meanwhile, Ifad Motors also is building its Royal Enfield manufacturing plant in Bangabandhu Sheikh Mujib Shilpa Nagar with a target to begin production by next year.
Suzuki, Runner and a few other brands are also in the cue to come up with their higher cc motorcycles in Bangladesh.