Bicycle exports have marked a sharp drop in recent months due to the ongoing global financial meltdown that rocked the developed countries since mid-last year, said government data and industry people.

Western countries, especially the European Union, are the main importers of Bangladesh-made bicycle.

“We are getting news that some of our buyers may be in deep trouble soon,” said MA Halim Khan, executive director of Meghna Group, the leading exporter of locally made bicycle.

“Global economic slowdown has caused a decline in bicycle demand in Europe,” said MMA Tanvir Titash, managing director of Uniglory Cycle Components Ltd, a maker of bicycle components.

According to the Export Promotion Bureau (EPB), the country exported bicycles worth Tk 59.93 crore in September 2008, which came down to Tk 38.29 crore in October and further dipped to Tk 23.65 crore in November.

EPB data show Bangladesh exported bicycles worth $64.28 million in fiscal year 2007-08, up by 18.93 percent from $54 million in fiscal 2006-07. Exports marked a 63 percent rise in July-November period in the current fiscal year over the same period last fiscal. The country exported around five lakh pieces of bicycles in 2007-08, industry people said.

Bicycle, which falls in light engineering sector in Bangladesh, has got increasing popularity in Europe due to its lower price. According to industry people, on an average a Bangladeshi bicycle costs $80 to $90, which is much higher than that of a China-made one.

Bangladesh is now manufacturing MTBs (mountain bikes), city bikes, free styles, trekking, folding, beach cruiser and kid bikes.

Currently, world's some of the leading companies including Raleigh, Avocet Sports, PCM, and Motor and Sports of the UK, Aldi of Holland, Bachtenkirch Interbike of Germany, M&F De Scheemaeker and Formula Cycling of Belgium are importing bicycles from Bangladesh.

“Export may decline further this year as the buyers are not placing more orders,” Tanvir Titash said.

Halim Khan said none is immune from the current financial crisis. He however said November to February is generally considered as dull season for the bicycle industry.

Currently, Meghna Group, M&U and Alita, a Malaysian company located in Chittagong Export Processing Zone, are engaged in bicycle export. Another big manufacturer -- German Bangla Bicycle Limited at Savar -- has recently started production and export.

MARKET OPPORTUNITIES

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Bicycle industry is considered to be the fourth most important manufacturing sector in Bangladesh.

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It has been declared as one of the five most potential industrial sectors by the government of Bangladesh.

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The local market for bicycle is currently estimated at BDT 1200 crores per year. An estimated 2.5 million pieces of bicycle parts are required in the local market each year, which are currently being imported from China and India.

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It is included in the thrust sector in the export policy.

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Only 60% bicycle parts are required to be manufactured locally to qualify for ‘Made in Bangladesh’ status and enjoy GSP facilities for export.

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Bangladesh has cash incentive of 15% on exports in this sector.

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Due to the LDC status, imports from Bangladesh would be cheaper for EU by 12-17% compared to Indian bikes, 55% than Vietnamese bikes and 65% than Chinese and Taiwanese bikes.

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Bangladesh also has access to a market of 1.3 billion people under the South Asian Free Trade Area (SAFTA) agreement.

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Organization of Islamic Council (OIC) and Gulf Co-operation Council (GCC) are actively considering preferential and concessional access to exports from Bangladesh.

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Walmart is already purchasing bicycles from Bangladesh.

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Due to the 40% supplementary duty held on imported bicycles, locally manufactured bicycles will have distinct price advantage in the local market.

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Bicycle exported from Bangladesh would be the most competitive in price due to duty free and quota free access.

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There are several fiscal and non-fiscal advantage s of setting up an industry in the EPZ of Bangladesh.

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The bicycle industry has grown by as much as 70% from the year 2003-04 to the year 2005-06.

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In 2005-06, Bangladesh exported bicycles to Europe and other countries worth US$ 67.26 million, which has increased by 64% than the previous year.

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Labor is available in abundance at a very low rate in Bangladesh, which can be trained very easily.

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It can generate new employment opportunities for both male and female workers