Md. Mahmudur Rahman
Chief Operating Officer
RFL Bike

Interviewed by Susmita Bhatta, Team MBR

Duranta Bike is the sister concern of the RFL group. It is one of the leading bicycle manufacturers and exporters in the country, having launched in 2015 with two plants in the Hobigonj district in the Sylhet division. These two factories are compliant with the world’s highest-tech mechanical component testing lab worldwide.

Susmita Bhatta: The bicycle manufacturing industry of Bangladesh is booming in an enormous way. What are the factors you think are contributing to this upsurge?

Md. Mahmudur Rahman: The industry has been gradually expanding since 1982 because of heavy traffic congestion and growing awareness regarding environmental issues. However, the unprecedented COVID-19 impact in Bangladesh caused a spike in the bicycle industry in 2020 as people opted for bicycles for social distance and health benefits. Home delivery services provided by online grocery stores were also a factor in the rise. Due to significant investment and innovation, RFL Bike was one of the dominant players during this growth trajectory.

Susmita Bhatta: How was the industry’s response to the shock of the COVID-19 pandemic? Did the pandemic provide any leverage to scale up the sector in the local and global context?

Md. Mahmudur Rahman: Although many businesses were affected by the COVID-19 pandemic, this particular industry benefited from the demand for bicycles, which helped it scale up the sector. Bicycles were important as a way to get around while maintaining social distance and reaping the health advantages of physical activity. As a result, the bicycle industry had to begin exporting in order to meet global demand as well. So, the value of exported bicycles stood at approximately USD 130 mln despite the economic downturn.

Susmita Bhatta: How is the industry being impacted by the rising import duties? Is there any budgetary initiative by the government to support the industry? What are the areas on which policymakers can work?

Md. Mahmudur Rahman: To meet local market demand for bicycles, complete bicycles are being imported from India and China as import duties are comparatively low. To discourage imports and encourage local manufacturing companies, the government should impose a high import duty. However, the government has decided to help the bicycle export industry by giving a 4% cash incentive to the export sector.

Susmita Bhatta: The bicycle industry is one of the emerging export-oriented sectors in Bangladesh. Would you please share with us how the industry is helping to ensure diversification of the export basket?

Md. Mahmudur Rahman: After 23 years of legacy in Bangladesh, the bicycle export business was valued at USD 130 mln, and it is anticipated to grow to USD 53.53 bln by 2027 as a result of the government’s recent decision to offer a 4% incentive to the bicycle export sector. So, despite the fact that Bangladesh’s export basket now comprises a large share of the RMG industry, the predicted growth in the export sector for the bicycle industry has the potential to diversify the export basket. As a result, Bangladesh’s exports can no longer be fully reliant on a single source.

Susmita Bhatta: Even though Bangladesh is the third-largest nonEuropean Union (EU) exporter of bicycles, the local market is still being dominated by India and China. Why is it like that?

Md. Mahmudur Rahman: The reason why the local market is still dominated by India and China is that we don’t have a backward linkage industry. So, 30%–40% of the parts and raw materials like derailleur gears, known as cycle gears, are imported from China, India, Malaysia, Indonesia, and Vietnam. Moreover, 70% of bicycles are still imported from there to meet local demand, despite the fact that Bangladesh is the third-largest exporter of bicycles.

Susmita Bhatta: The industry has not attracted much foreign direct investment (FDI) yet. What do you suggest for the industry participants to attract foreign investors?

Md. Mahmudur Rahman: Bangladesh is still dominated by India and China, which explains why just 30% of bicycles are manufactured in this country. Bangladesh still imports 70% of bicycles and 35% of bicycles’ spare parts at a high import duty due to a lack of backward linkage, and hence there is a lack of foreign investment lure in this industry. Increased freight costs, a scarcity of containers, and the lack of a deep-sea port in Bangladesh are the other factors that have contributed to this industry’s lack of FDI. Therefore, these issues must be addressed in order to attract significant foreign investment. To do that, the government should take steps to provide greater financial incentives so that backward linkage industries can be established and businesses don’t have to import bicycles in bulk at a high import duty. Proper government policy support can also help to reduce the adverse effects of other factors on this industry, which will help attract FDI.

Susmita Bhatta: During the global pandemic, the industry experienced robust growth. Will consumer behavior go back to the pre-pandemic trends, or will it affect the pace of the industry’s growth?

Mahmudur Rahman: Due to significant traffic congestion after reopening everything, I think consumer behaviour will not return to pre-pandemic levels. Because of Bangladesh’s rising inflation, lower purchasing and maintenance costs are also a factor for preferring bicycles. We also know that people are habitual creatures. Many people use bicycles as a useful tool for reaping health benefits during the pandemic. As a result, it’s likely that those individuals will continue to use this tool. Finally, because consumers still prefer to order food online, the use of bicycles in the e-commerce sector will expedite rather than slow down the growth of the bicycle industry.