Mercedes, BMW in talks to open assembling plants in Bangladesh

Demand for luxury cars is increasing rapidly in Bangladesh, where around 30 percent of private cars are new vehicles imported from different countries. (Shutterstock)
Updated 15 September 2019

Mercedes, BMW in talks to open assembling plants in Bangladesh

  • Experts express optimism about the high-profile investments in the country, which is a fast-growing market

DHAKA: World-renowned executive car producers, BMW and Mercedes-Benz, could soon be putting the pedal to the metal by setting up an assembling plant in Bangladesh, officials told Arab News on Saturday. 

A high-profile delegation from Germany is on a five-day visit to the country, to explore investment options. 

The group held several rounds of talks with top Bangladeshi government officials, including Finance Minister AHM Mustafa Kamal, and representatives of the Bangladesh Investment Development Authority (BIDA) to speed up the investment process. They also met Prime Minister Sheikh Hasina on

“We have just started the discussions with the German investors. We hope that it is going to be a Foreign Direct Investment (FDI). Although we are yet to confirm the amount, I can say that it will definitely be a big one,” Nabash Chandra Mandal, executive member of BIDA told Arab News.

Mandal added that the visiting delegation has been briefed about the investment road map and the ease of doing business in Bangladesh.

“It will take a couple of months to finalize the negotiations and we hope things will move positively,” Mandal said. 

The companies hope to set up a plant in Bangladesh to manufacture some parts locally. The rest will be imported from Germany, with plans to build a brand new vehicle in Bangladesh in the future, Finance Minister Kamal said.

“It is a good proposal as we will not have to import very expensive cars from abroad if they set up the plant,” he added.

The proposal has got its seal of approval from experts and analysts, too.

Professor Mustafizur Rahman, a distinguished fellow at the Center for Policy Dialogue (CPD) — a non-governmental think-tank — said he was optimistic about the plans considering it could be a “new kind of FDI for the country.”

He added that once the companies set up shop, it will help to boost the economy and create a positive branding for Bangladesh in the global market. 

“Since it’s a capital intensive venture, this large-scale FDI from Germany will definitely encourage other big, global players to invest in Bangladesh. Besides, it will create another opportunity for the small and medium enterprises to grow, centering around this world-famous vehicle assembling plant, and generate employment, too,” Professor Rahman told Arab News. 

Bangladesh is one of the world’s fastest growing markets, with the demand for luxury cars increasing by the year.

According to the Bangladesh Reconditioned Vehicles Importers  and Dealers Association (BARVIDA), in the past year alone, nearly 13,000 reconditioned private cars were imported. 

“Around 70 percent of the cars that you see on the streets are reconditioned and mostly imported from Japan,” Shahidul Islam, the secretary of BARVIDA, told Arab News, adding that in recent years there has been “an increase in demand for new cars.”

“Currently, around 30 percent of our private vehicles are brand new cars imported from different countries. The new investment plans will help our upper-
class buyers to buy brand new vehicles at a cheaper price. As the country’s economy is moving at a very fast pace, the executive cars will enjoy more market share in the coming days,” Islam said.

The German Asia-Pacific Business Association — together with the Association of the German Chambers of Commerce and Industry — organized the visit for the delegation which is being headed by Peter Fahrenholtz, the German ambassador to Bangladesh.

British fashion linchpin gets post-lockdown trading lift

Updated 24 min 8 sec ago

British fashion linchpin gets post-lockdown trading lift

  • Primark ‘back to business’ as curbs ease, but still faces full-year profit slump

LONDON: Trading in British fashion chain Primark’s reopened stores has been encouraging, but the prolonged coronavirus lockdown means the retailer’s full-year profit is likely to slump by about two-thirds, owner Associated British Foods said.

All 375 Primark stores were shuttered in March as the pandemic spread. As governments eased lockdown restrictions the stores reopened, including all 153 stores in England on June 15.

AB Foods said on Thursday that since the reopening of the first Primark stores on May 4, cumulative sales for the seven weeks to June 20 were £322 million ($403 million) and were 12 percent lower than last year on a like-for-like basis.

It said sales in the week ended June 20, with more than 90 percent of selling space reopened, were £133 million, and trading in England and Ireland was ahead of the same week last year.

“We’re really getting back to business here. That number (down 12 percent) is much better than people were expecting,” AB Foods finance chief John Bason told Reuters.

However, the lockdown means Primark’s profit will be substantially down. The retailer has no online offer.

For the full 2019-20 year, Primark forecast adjusted operating profit in a range of £300-£350 million, down from the £913 million made in 2018-19.

Bason said that Primark has also placed more than £800 million of orders for the autumn/winter season and expects the total to exceed £1 billion.

AB Foods said that overall group revenue from continuing businesses for the 40 weeks to June 20 was 13 percent lower than the same period last year at constant currency.

For 2019-20 it expects “strong progress” in adjusted operating profit at its sugar, grocery, agriculture and ingredients businesses.

The grocery division, whose brands include Kingsmill bread, Twinings tea, Ovaltine and Jordans cereal, had a 9 percent increase in third-quarter revenue, with higher sales through retail channels more than offsetting weaker demand from foodservice businesses closed during the lockdown.

The group expects to end the year with net cash of more than £750 million.