Trade
6 years ago

Shortage of capital, manpower hits light engineering industry hard

Entrepreneurs demand setting up of industrial park immediately

Workers seen at a workshop at city’s Dayaganj                   	— FE photo
Workers seen at a workshop at city’s Dayaganj — FE photo

Published :

Updated :

Inadequate working capital, shortage of skilled manpower and absence of necessary infrastructure facility are taking its toll on the desired growth of local light engineering sector, industry insiders said.

Despite having its immense potential, the country's light engineering sector fail to flourish at an expected level due to such reasons, according to them.

About the working capital, a number of entrepreneurs said they have limited access to bank loans.

Apart from this, higher rate of interest along with some hurdles to getting bank credit are also major problem for them, they mentioned.

Taking to the FE, Bangladesh Engineering Industry Owners' Association (BEIOA) president Abdur Razzaque said working capital, adoption of advanced technologies, skill training for workers, infrastructural development and policy support from the government are crucial for the development of the sector.

Although the government took initiative to set up an industrial park on 25 acres of land in Munshiganj for this sector in 2016, a little progress had been made in this regard, he claimed.

The Bangladesh Small and Cottage Industries Corporation (BSCIC) is implementing the project, but it is yet to acquire land, he said.

"We can meet the demand for only 20-25 per cent of light engineering products. And the rest of products are imported from different countries," he said.

After independence in 1971, the sector had only 100 enterprises, but it reached more than 40,000 now, Mr Razzaque said.

To promote the sector, BEIOA has already provided training to 10,000 people under Skills for Employment Investment Programme (SEIP) project on Computerised Numerical Control (CNC) operation and others, he said.

An industrial park must be set up immediately for the development of this sector, he added.

LE has become the highest export earning sector in India with direct support of its government, but this sector in our country is yet to tap the potential due to lack of government support, he claimed, adding that usually large business groups don't invest in this sector.

Saiful Islam, proprietor of Progoti Engineering Works in Old Dhaka, said his workshop provides almost all kinds of machinery and spare parts to the industrial sector especially paper mills.

"Import of raw materials with high tax and duty has been big impediment to export of light engineering products," he opined.   

Syed Haider Ali, owner of Asian Tools, said very few customers are now placing orders.

Apart from different types of gears, his workshop has been manufacturing plastic moulds and spare parts for jute, textile and garment industries since 1955.

Mr Ali admitted that his business has been expanding day by day, but they are facing shortage of working capital due to non-availability of bank loan.

"Though we applied for bank loan several times, but we did not take out it due to high interest rate," he told the FE.

Rubel, owner of SN Engineering Workshop at Dholaikhal, told the FE that the prices of raw materials are costlier than that of China's products. "So, customers are buying Chinese products due to lower cost," he said.

Abdul Kader, proprietor of Famous Engineering Works, said his workshop manufactures all kinds of hydraulic and mechanical jacks, electrical hydraulic pumps, bridge load test jacks, manual pump & electric power packs, ST ware jacks.

"We face barrier due to high prices of raw materials," he added.

Bangladesh Industrial and Technical Assistance Centre (BITAC) Tool Institute Project Director Dr Sayed Md Ehsanul Karim said introduction of Computerised Numerical Control (CNC) instead of present analogue system is needed to produce world class products.

"Productivity in the light engineering sector could be raised through CNC," he said.

Dr Nazneen Ahmed, senior research fellow at Bangladesh Institute of Development Studies (BIDS) who conducted research on the sector, said a good number of skilled people are working at this sector, but they do not have any academic qualification.

"They can be sent to different countries after giving certifications," she told the FE.

She said the sector needs a separate estate like tannery to explore huge export potential as different factories are now running in different places of the country. 

Mentioning that the sector has a huge potential, Dr Nazneen said the government should devise a long-term plan to make this sector fully export-oriented.

Project Director Nazimul Abedin said the land acquisition process for the industrial estate was going on fast.

"We are hopeful about the completion of land acquisition within June 2019," he said.

Country's total investment in the light engineering sector (LES) is only $15 billion against the demand of $7 trillion LES products in the global market, according to BITAC.

LES is recognised as 'the mother of all industries' because it provides backup support of spare parts and repair to almost all industrial sectors including plastic, cement, paper, jute, textile, sugar, food processing, railway, shipping, and garments.

Export earnings from the sector stood at $510 million in the fiscal year 2015-16 and $689 million in FY 2016-2017 and are expected to reach $9.0 billion by 2030 and $15 billion by 2041, the BITAC data showed.

The Export Promotion Bureau (BPB) data showed that engineering products fetched $355.96 million in FY 2017-2018.

LE sector provides employment to 600,000 people involved in 50,000 microenterprises and 10,000 small and medium enterprises (SMEs).

Its annual turnover is $1600 million of which import substitute products worth around $200 million.

Light engineering entities in the country have investment of about $14.28 billion.

[email protected]

Share this news