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.

Analysts urge Canada to focus on boosting the economy

Updated 06 July 2020

Analysts urge Canada to focus on boosting the economy

  • Canada lost one of its coveted triple-A ratings in June when Fitch downgraded it for the first time

TORONTO: Canada should focus on boosting economic growth after getting pummeled by the COVID-19 crisis, analysts say, even as concerns about the sustainability of its debt are growing, with Fitch downgrading the nation’s rating just over a week ago.

Canadian Finance Minister Bill Morneau will deliver a “fiscal snapshot” on Wednesday that will outline the current balance sheet and may give an idea of the money the government is setting aside for the future.

As the economy recovers, some fiscal support measures, which are expected to boost the budget deficit sharply, could be wound down and replaced by incentives meant to get people back to work and measures to boost economic growth, economists said.

“The only solution to these large deficits is growth, so we need a transition to a pro-growth agenda,” said Craig Wright, chief economist at Royal Bank of Canada. The IMF expects Canada’s economy to contract by 8.4 percent this year. Ottawa is already rolling out more than C$150 billion in direct economic aid, including payments to workers impacted by COVID-19.

Further stimulus measures could include a green growth strategy, as well as spending on infrastructure, including smart infrastructure, economists said. Smart infrastructure makes use of digital technology.

“We have to make sure that government spending is calibrated to the economy of the future rather than the economy of the past,” Wright said.

Canada lost one of its coveted triple-A ratings in June when Fitch downgraded it for the first time, citing the billions of dollars in emergency aid Ottawa has spent to help bridge the downturn caused by COVID-19 shutdowns.

Standard & Poor’s, Moody’s and DBRS still give Canadian debt the highest rating. At DBRS, Michael Heydt, the lead sovereign analyst on Canada, says his concern is about potential structural damage to the economy if the slowdown lingers too long.

Fiscal policymakers “need to be confident that there is a recovery underway before they start talking about (debt) consolidation,” Heydt said.

Fitch expects Canada’s total government debt will rise to 115.1 percent of GDP in 2020 from 88.3 percent in 2019.

Royce Mendes, a senior economist at CIBC Capital Markets, said the economy still needs more support.

“Turning too quickly toward austerity would be a clear mistake,” he said.