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The Financial Express

Light engineering needs the care it deserves


Light engineering needs the care it deserves

That the country's light engineering sector has the potential to grow to boundless level can hardly be disputed. In fact, no one has ever disputed but it is far from assuming the role it is supposed to take.

Although mostly informal with unregulated scope and pattern of work, light engineering is often recognised as a prospective driver of economic activities that not only helps millions of small businesses to thrive but equally importantly, serves as a backyard for manufacturing scores of engineering products. This has been aptly echoed by none other than the Prime Minister when she announced light engineering as the 'product of the year' in January this year. 

As a feeder sub-sector, light engineering produces machines, equipment, tools of heterogonous varieties for domestic usage in mills, factories and engineering workshops. Beside providing cost-cutting benefits to the consumers, its all important role is in saving foreign exchange that otherwise the country would have to spend on imports.

It is estimated that the sector currently accounts for around 50 per cent substitutes  for imported items in the country. This is reflected in the support it provides to industrial, agricultural and construction sectors by manufacturing a wide range of spare parts, castings, moulds and dices, oil and gas pipeline fittings and light machinery, as well as repairing those. Equally significant is its role in job creation. Rough estimates suggest that as many as 600,000 skilled and semi-skilled workers are employed by around 40,000 micro-enterprises and 10,000 small and medium enterprises (SMES) under this sub-sector. The sector is reportedly manufacturing products worth Tk 250 billion with local technology. The Business Promotion Council, operating under the commerce ministry, estimates that local light engineering industries produce 3,815 types of machinery, spares and accessories.

Despite the bright and laudable role, the downside standing in the way to the sector's rise up to its potential is that it is yet to take an institutional shape. In order for the sector to attain an institutional shape as well as  desired growth and diversification, the key requirements are  the government's policy support, public-private joint initiatives for institutional and financial assistance, availability of technical and business information, innovation and upgrading of technology, capacity building, research and development facilities and removal of a host of growth-impeding factors. A news item, published in this newspaper recently, highlighted some of the prospects as well as the immensely gifted potential of the sub-sector that could be capitalised for its growth as a major import substituting industry. Quoting experts, it said that by investing Tk 60 billion in the improvement of the light engineering sub-sector in a planned and targeted manner, it is possible for the country to save Tk 650 billion with import substitute of light engineering products every year. This also conversely implies that if the light engineering units, spread out all over the country, are not taken care of immediately to suit the varying demands of the consumers, imported products would soon seize the domestic market. The need for the sector to be modernised with appropriate technology is all the more important as global competition will spare nothing to take control of niche markets.

These small and medium enterprises are currently facing serious hardships on various counts, according to the Bangladesh Engineering Industry Owners Association (BEIOA). These include lack of advanced technology, dearth of skilled manpower, absence of product diversification and market promotion measures. Over and above, the entire industry is without any worthwhile credit finance. Industry insiders opine that bringing the innumerable work units under an integrated plan is crucially important, and to do so, a separate policy for the sector is long overdue. The government policy on the sub-sector would also facilitate adoption of work programme for product development and product adaptation for both domestic consumption and export.

Although lacking in institutional shape, light engineering in the country has a solid foundation since long, aided mainly by a considerably big pool of skilled and semi-skilled workforce. While the need to train the workforce for upgrading their skills is important, more important is the need to energise it by creating facilities equipped with advanced technology. This can happen through increased investment. Insiders are of the view that segmenting the sector along the types of works done might offer the opportunity for the government to look at the prospects of each of the sub-sectors as well as identify the support they need-- not only policy-related, but also technological and financial and so forth. Observers feel that some fiscal incentives are also needed for the sector, such as concession in payment of VAT.

 Concerned quarters believe that there is a critical need for basic infrastructural facilities like gas, electricity, water and dumping yards. This may be possible with arrangements for the units to be located in dedicated work zones in clustered forms depending on the types of works performed. So, a good deal needs to be thought out to work on a systematic plan of action to set things right for the industry to keep growing. It is in this context that the PM's announcement of light engineering as the product of the year should be seen as more than just motivational but a pressing call for appropriate policies and actions to equip the sector with the vigour and strength it so badly needs.

Lately, it has been learnt that the government has undertaken a project titled Export Readiness Fund (ERF) in collaboration with the World Bank Group to provide matching grant facilities to light engineering along with three other prime sectors towards upgrading, product diversification, better market access as well as equipping them with environmental, social, and quality (ESQ) compliance standards. Selection of light engineering as a beneficiary of the fund is expected to revamp this sector with fresh ideas for innovation and technology.  

 

wasiahmed.bd@gmail.com 

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