Blog - Heavy machinery business expands in Bangladesh

Many mega construction projects have begun in the country over the past decade. As a result, the use of heavy machineries has increased enormously. As the market expands, many people are getting involved in the business of heavy machinery. Since such machinery has not been manufactured in the country as yet, traders import those and sell these locally.

Many companies have taken up business as distributors of various global heavy machinery manufacturers, resulting in the expansion of their market in Bangladesh.

Business persons said most of the heavy machinery being used in infrastructure construction is second-hand equipment. This machinery is imported after being used in other countries.

People concerned said there is a huge difference in prices between old and new machinery. That is why demand of old equipment is more. About 5,000 units of heavy machinery are imported every year. Import costs increased to about Tk 20 billion (2,000 crore) from less than Tk 10 billion (1,000 crore) in five years.

US firm Caterpillar controls a big portion of the construction equipment market. Bangla Trac Limited (BanglaCAT) is the sole authorized dealer of Caterpillar in Bangladesh. China’s Xuzhou Construction Machinery Group (XCMG) is the third largest construction machinery company in the world and Earthmoving Solution Limited is its distributor in Bangladesh.

China’s SANY Heavy Industry ranks fourth in construction machinery in the world and Powervision Limited is its local distributor. Energypac and Runner bring the equipment of UK’s JCB and South Korea’s Hyundai respectively.

ACI Motors and Metal Motors ventured into this business several years ago. Metal Motors is the local distributors of India’s Escorts Construction Equipment.

Managing director of Metal Motors Sadid Jamil told Prothom Alo, “We have received supply orders of Tk 1 billion (100 crore) equipment so far. We have received these orders from international firms since many road construction and other projects are on. Besides, private firms are also purchasing the equipment.”

ACI brings equipment of China’s Lovol, Switzerland’s Case and Japan’s Kobelco. ACI is also the distributor of India’s Indo Power.

Managing director of ACI Motors Subrata Ranjan Das told Prothom Alo, “We are bringing machinery from abroad as per buyers’ requirements. There is an increase in clients for new equipment instead of old machinery. Currently, we sell equipment worth over Tk 1 billion (100 crore) annually and the demand is on the rise.”

Sources said there is a 1 per cent tariff on import of heavy machinery for customers and 5 per cent for companies. Big firms import the machinery with the help of these distributors and pay the latter a certain commission.

Traders said construction is underway in a number of mega projects including several special economic zones and power plants, Padma bridge, metro rail, Rooppur Nuclear Power Plant, Karnaphufuli Tunnel, Maheshkhali deep seaport and third terminal project of Dhaka’s Hazrat Shahjalal International Airport.

Besides, construction and repairing work of more roads and railways are also on to improve the communications. On top of that, local and foreign entrepreneurs are opening big factories in the private sector. Real estate companies have also increasingly been using heavy machinery in construction.

Excavators, loaders, wheel dozers, soil compactors, pipe layers and backhoe loaders are among the types of heavy machinery being used in various government and private projects.

Roads and Highways Department, Bangladesh Inland Water Transport Authority (BIWTA), Armed Forces, local and foreign contractor firms and various government and private agencies are the main customers of these heavy machineries.

BanglaCAT is the largest seller of heavy equipment in the country. Head of Machine Sales at BanglaCAT Sakhawat Hossain told Prothom Alo, “Awareness is growing among local contractors and construction firms but customers are still more interested in old equipment due to low prices.”

People concerned from the sector said, unlike other vehicles, heavy machinery does not require a movement permit. That is why there is no loan or leasing facility to procure such equipment. The government would be able to earn revenue by registering heavy machinery. It would also be possible to take legal action if an accident occurs. Besides, if a registration process starts, loan facilities would be available to purchase the machinery. So, Bangladesh Road Transport Authority (BRTA) can launch registration of the equipment, they added.

This report appeared in the print and online edition of Prothom Alo and has been rewritten in English by Hasanul Banna