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Light engineering sector does not have enough government policy support to boost the country’s export revenue chain at post-LDC graduation period, according to experts and businesses.
They said that the existing global demand for light engineering goods was worth approximately over $ 7 trillion and if the sector got proper treatment, it might earn export revenue of over $ 7 billion in near future.
According to the Bangladesh Engineering Industry Owners Association, more than 40,000 light engineering enterprises exist in the country and around 6 lakh people are directly and indirectly dependent on the sector.
Light engineering goods manufacturers said that they were manufacturing over 10,000 types of products but lack of financial backing due to an absence of government policy support stalled the growth of the sector.
They said the government should ensure financial support, introduce an international-standard certification system to ensure production quality and also reduce the duty on import of modern technology and raw materials for the development of the sector.
They also urged the authorities concerned to ensure them treatment similar to RMG sector so that they can make a significant contribution to boost the country’s export basket at the post-graduation period.
Export earnings from the sector year-on-year increased by 50.4 per cent to $ 795.63 million in the financial year 2021-22 from $ 529 million in the financial year 2020-21, according to BEIOA.
BEIOA president Md Abdur Razzaq told New Age, ‘If we can capture only 1 per cent of the international market share, our export earnings would rise to $ 7 billion in the coming days.’
He said, ‘Overall investment in the light engineering industry is about $ 15 billion and we captured about 20 per cent of the local market while some 60 per cent depended on imports.’
‘China, Japan and Korea are benefiting from our merchandise and the demand for our commodities in other trade markets is gradually increasing. Our annual turnover is $ 1.6 billion,’ said Abdur Razzaq.
‘China used to be our competitor in the international market but Thailand is also progressing with its business now. There is demand for our local products in international markets due to their lowest production cost and fine quality,’ added Razzaq.
He also said, ‘We import raw materials from countries like China and manufacture the product with our manpower.’
‘We have to pay 30-40 per cent duty on import of raw materials while tax on importing finished products is only 1 per cent which makes it difficult for us to compete with international traders,’ he said.
He urged the government to provide long-term loan services to the sector at minimum interest.
The government has been working on developing five industrial parks for the sector at Dhaka, Narayanganj, Jashore, Bogura and Narsingdi while a number of light engineering training institutes will also be set up to create skilled manpower to be employed at the parks.
Besides, an industrial city project worth Tk 316 crore through the Bangladesh Small and Cottage Industries Corporation on a 50-acre land in Munshiganj is in progress and scheduled to be completed by 2022.
Dhaka Chamber of Commerce and Industry president Rizwan Rahman recently said that if the light engineering sector got proper treatment from the government, the country had an opportunity to be a global auto-hub like India.
He said, ‘Our light engineering industry is capable of producing any kind of automobile components and we should focus on promoting the industry.’
Rizwan also suggested introducing a central bonded warehouse facility for the sector and also allowing venture capital funding as well as ensuring IP facility for local manufacturers to ensure the development of the sector.
SME Foundation managing director Md Mofizur Rahman said, ‘Government should ensure adequate support for the sector to meet the government’s target of 2041.’
He also said, ‘The government should focus on increasing the validity period of trade licences rather than increase the fee so that small and medium entrepreneurs including light engineering entrepreneurs remain in compliance as many are deprived of enjoying government facilities due to the trade licence compliance crisis.’
The main markets for the light engineering products are Thailand, Japan, the Netherlands, India, South Korea, the United Kingdom, Taiwan and Pakistan.
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