South Korea wants stronger policy support from the government to manufacture in Bangladesh, which, in turn, will create jobs at home and help achieve middle-income status, said its ambassador yesterday.

As Bangladesh graduates from the LDC bracket, its duty-free quota will be taken away and both the government and the private sector need to make extensive preparations for the competitive global market that awaits, said Park Young-sik, the South Korean ambassador to Bangladesh, during a visit to the manufacturing plant of Hyundai Motors in Gazipur.

The plant at the Kaliakoir Bangabandhu Hi-Tech Park is a joint venture of Bangladeshi company Fair Technology and Korea's Hyundai.

"Such a factory is very important for Bangladesh because it creates jobs for the local youths. It works as a way of technology transfer and you get brand new cars instead of second-hand cars, whose carbon emission is higher than new cars," Park said while interacting with the members of the Diplomatic Correspondents Association Bangladesh (DCAB).

Manufacturing at the plant began early this year. At present, 150 cars are made per month, with plans to manufacture 6,000 cars by next year.

However, Bangladesh's industrial policy is not adequately supporting the manufacturing sector, he said, adding that only 2 percent of the cars plying the roads in Bangladesh are locally assembled or manufactured.

"If at least 15 percent of the cars could be locally manufactured, it would create lots of jobs and help the local economy."

Asked what are the challenges of local manufacturing and foreign direct investment, he said: "The investment environment needs to improve. Even my colleagues faced difficulties in getting visas or renewing visas. Not only Korean companies but also other foreign companies face difficulties in opening LCs [letters of credit]."

The taxation and customs system are not always transparent.

"These basic aspects need to be improved before asking for foreign investments," Park added.

Ruhul Alam Al Mahbub, chairman of Fair Group, said they have big plans for more value-addition production of cars and other electronic products.

"But we need stronger policy support. It was unimaginable that we could set up a car manufacturing plant. We could do it because of the government support. Our next plan is to set up a much bigger plant than this one. We want to go for full body and parts manufacturing."

The government needs to think about promoting locally manufactured cars and take a decisive policy towards this end, Alam added.