Business Environment (BUS203)

Quiz 1

Prepared for:
Mohammad Atiqul Basher
Lecturer
BRAC Business School

Prepared by:
Sumaiya Selim Sushme
Id:20104071
Section:04
Summer 2021

Date of Submission: July 15, 2021

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1. Bangladesh has been contemplating to set up an electronic vehicle (EV) factory at the Mirsarai
economic zone. Considering the status of the automobile industry of the country, i) at which
level of technology transfer do you think, this project resides in? and ii) Which stakeholders
might be crucial to start this project at a quicker fashion? State your reasoning based on a brief
research throughout an industry analysis of this sector (Words: 1000, Score:10)

Answer:

The term "technology transfer" refers to the transfer of new technology from its creator to a
secondary user, most often from developed to underdeveloped countries in an effort to enhance
their economies. Bangladesh being a growing economy with growing population and increasing
purchase power have seen a major demand for convenient transportation. With a GDP growth
rate of over 6 percent in the last decade, Bangladesh is a lucrative market ready for expansion,
thanks to its enormous pool of employees, rising consumer market, and proximity to key supply
chains. These factors are providing the automobile industry with an upsurge in Bangladesh.
Moreover, If we look at the status of the automobile industry of Bangladesh it can be said that it
is in the duplicate level of the technology transfer hierarchy. Duplicate level is basically an
intermediate level which incorporates high investment ability to enlarge capacity; its
enhancement is primarily accomplished through the importation of innovative machinery from
outside sources. Even if the automobile industry of Bangladesh is flourishing we would not be
able to make full- fledged electronic vehicles because many of the parts are not available in
Bangladesh e.g. engines of cars, we are still not sufficient in making those items. As a result, a
large scale of import would take place. The technology at which the Bangladesh automobile
industry is currently residing on doesn't require a Research and development cost, which is
actually helping us to save a huge cost at the initial level. However, if we invest in the R and D
step by step then there is a chance of reaching the Adaptive level e.g. with a slightest investment
in the research and development we can make better batteries. Furthermore, The Bangladesh
government presents a few intriguing ideas regarding electric vehicles in its Draft Automobile
Industry Development Policy (2020). It has expressed a strong desire to provide "Policy
assistance and priority" to electric vehicles from the start of their development. Firstly, In order
to promote research and development on electric mobility and critical components such as
batteries and charging stations, strategy six is being emphasized even more. This is critical in

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ensuring that the country has access to electric vehicles and components, as well as encouraging
the sector's growth. Secondly, a scheme for developing “Technology Acquisition Fund” is also
made signaling the government's willingness to invest in the sector and make technology more
accessible to local producers that need it. Thirdly, the government is planning to increase import
costs which will be used to assure local market competition by encouraging local manufacturers.
As stated by The Business Standard (2021), In contrast to Bangladesh's existing position, where
the majority of parts and automobiles are imported from abroad, the overall zeitgeist of the new
government strategy appears to be aiming towards local manufacture and relying less on imports.
However, there is an uncertainty regarding this policy as Bangladesh is not much sufficient yet
for making full-fledged electric vehicles. Although we are at the duplicate level but the
government policy is indicating that we are going to move to the adaptive level shortly.

According to The Daily Star (2021), the Bangladesh Road Transport Authority (BRTA), the
country has 4,471,625 registered cars, with just 370,519 being classified as "Private Passenger
Car," followed by 105,896 "Microbus," and 66,219 "Jeeps." Moreover, The Daily Star (2021)
stated, country's 12 million middle-income earners are affluent, and this portion of the population
is rising at a rapid rate of 10% per year. Many of these customers are unable to obtain the
vehicles they wish due to exorbitant import duties, which range from 130 percent to 850 percent.
This is indicating a huge scope for the development of electric vehicles which would be less
costly than the other vehicles. Furthermore, the stakeholders that are important to get the
initiative off the ground quickly are Ministries of the Government, Investors and Environmental
organizations and activists. Firstly, the ministry of Industry should make improvements in the
production of tech parts. This can be done by ensuring proper facilities that are required for an
Industry to flourish e.g. electricity (to meet the energy need), supply chain (better transportation
system by providing better roads and infrastructure). Secondly, investors will be more willing to
invest in this industry because Bangladesh is a developing nation and has a high chance of
flourishing in this sector. Thirdly, Environmental organizations and activists. Since this group of
people are more concerned about the green energy, climate change and environment of the
country and world they would impose pressure and would make an effort to persuade the
Government, which would result in the success of the project. Besides, the Ministry of

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Commerce should impose less tariff and duty on the imports of different tech parts initially.
Also, the Ministry of finance should allocate a higher amount for the development of the
automobile industry in the budget. In addition, special incentives for investors should also be
made e.g. 12 year exemption of Income Tax for park developers and 10 years for investors which
would encourage the investors to invest more.

Therefore, it can be said that Bangladesh can set up an electronic vehicle (EV) factory at the
Mirsarai economic zone if it takes into consideration the factors that are stated above and can
implement those in proper way.

Reference:

Haq,A.R. (2021, February 13). A brief look at the auto industry in Bangladesh. The daily Star.
https://www.thedailystar.net/supplements/30th-anniversary-supplements/going-
digital/news/brief-look-the-auto-industry-bangladesh-2043941

Islam,M.M, & Hasan, H. (2021, June 3). The Future of Electric Vehicles in Bangladesh. The
Business Standard. https://www.tbsnews.net/features/thoughts/future-electric-vehicles-
bangladesh-255064

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