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Bangladesh's light-engineering sector is likely to enter the billion-dollar foreign exchange-earning club within a year - enlarging the country's export basket, officials said on Friday.
In the last fiscal year (FY), 2021-22, Bangladeshi small- and medium-scale manufacturers made shipments of engineering products worth US$ 795.63 million, which is 50.4-per-cent higher than the previous FY, the Export Promotion Bureau (EPB) data showed.
In FY 2021, the earnings from export of engineering products were $529 million, as per the official data.
After a massive debacle in FY 2020 amid impact of the coronavirus pandemic, the light engineering sector rebounded, and its export earning showed 81 per cent growth in FY 2021.
Over the last two years, the sector has been playing a vibrant role in enhancing the country's export basket, as its earning has been growing year-on-year.
Analysts said light engineering is a hub for nearly 800,000 jobs. After meeting some 30 per cent of local demand, it earned more than $650 million in foreign exchange on an average per annum in last two consecutive years.
Still, Bangladesh has bagged a very small share of the $7.0-trillion international market, they noted.
The country mainly exports bicycles, electrical equipment, construction-related machinery, stone and brick crushers, spare parts for paper and cement mills, bicycle light fittings, cast-iron articles, carbon rods and automobile spares, train-and-rail-support equipment, marine spare parts, etc.
Engineering equipment, bicycle, iron steel, and electric products are the dominant ones for export earnings of the sector's small and medium enterprises (SMEs).
Of the $795.63 million shipment in FY 2022, the country earned $241.56 million from engineering equipment export, $167.95 million from bicycle, $154.68 million from iron steel, and $100.10 million from electric products.
Industry insiders said since the export earning from light engineering products has been swelling over the last couple of years, it would enrich Bangladesh's export basket through diversification of products.
President of Bangladesh Engineering Industry Owners Association (BEIOA) Abdur Razzak said the light engineering sector is likely to cross $1.0-billion earning mark by the end this fiscal (FY 23).
"I am sure that the sector will see a boost in the coming days, as the SMEs and micro industries are trying to upgrade their enterprises to modern ones and produce quality products for shipment," he added.
An FE analysis has found that the country's export of engineering products earned $688.84 million in FY 2017. But the shipment faced a steep fall after the fiscal with $355.97 million earning in FY 2018, $341.3 million in FY 2019, and $292.92 million in FY 2020.
The export rebounded in FY 2021, made 81 per cent growth and reached $529 million, the EPB data showed.
Meanwhile, Prime Minister Sheikh Hasina in January 2020 declared light engineering as the "product of the year" in an attempt to bring special attention to the sector, so that it could increase the country's foreign exchange reserve through export of various goods.
Afterwards, the Ministry of Industries decided to set up light engineering industrial parks in Dhaka, Narayanganj, Jashore, Bogura and Narsingdi to explore full potentials of the growing sector.
The sector is now providing support to the country's industrial, agricultural and construction sectors through manufacturing a wide range of spare parts, castings, moulds and dices, oil and gas pipeline fittings, and light machinery, BEIOA President Mr Razzaque said.
Various electrical products, such as sockets, cables and electrical fans, are manufactured here - with domestic suppliers accounting for 48-52 per cent of the country's demand, which were previously met with import.
The Business Promotion Council under the Ministry of Commerce estimates that local light engineering industries produce 3,815 types of machinery, spares and accessories.
Centre for Policy Dialogue (CPD) Research Director Dr Khandker Golam Moazzem said it is a good news for Bangladesh that the country is going to get another billion-dollar export-earning sector.
"For a long time, leather, jute and fish have been showing a volatile trend in their export earnings. But as the light engineering sector has been maintaining a good growth over the last few years, it could be one of the best foreign exchange earners of Bangladesh."
"Another good news is that Bangladesh is going to shift from its low-tech industry to medium-tech industry. If the trend sustains, the country will show its shifting to a high-tech manufacturer in the global arena," he told the FE.
"But the main obstacles (in this regard) are absence of international-standard certification, skilled manpower, infrastructure and branding. When these problems can be overcome, the country's engineering sector will emerge as another major forex earner, reducing heavy dependency on RMG."
Bangladesh should invite some international-standard enterprises for investment, like Korean Hyundai, for transferring their technical knowhow, developing skilled manpower here, and building the country's image, the economist suggested.
Meanwhile, the Bangladesh Industrial Technical Assistance Centre (BITAC) has recently set up a Tools and Technology Institute on it premises in Dhaka, which is helping the local SMEs to standardise their products.
The entity has a plan to gradually turn the institute into an international-standard body for certification and develop high-skilled manpower.
Analysts said neighbouring India and Pakistan have already set up many industrial parks for light engineering sector and are earning billions of dollars every year.
Since the global market size of light engineering products is about $7.0 trillion, and European and American markets provide duty-free access to Bangladesh, there are huge potentials for boosting the country's shipment through producing international-standard products, they observed.