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Indisputably, the country's light engineering sector has immense potential for growth. Yet, while no one has contested this fact, it is still far from assuming the highly important role it is supposed to play.
Despite its informal nature and unregulated patterns of work, light engineering is frequently acknowledged as a promising catalyst for economic activity. Not only does it foster the growth of countless small businesses but also serves as a vital hub for the production of numerous engineering products.
As a feeder sub-sector, light engineering produces machines, equipment, tools of heterogeneous varieties for domestic usage in mills, factories and engineering workshops. Besides 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 of 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 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 Tk250 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 highly useful and laudable role, the downside of the sector is its failure to take an institutional shape which undermines its potential for future growth. In order for the sector to attain an institutional shape as well as desired growth and diversification, the key requirements are government 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 potential of the sub-sector that could be capitalised on for its growth as a major import-substitute industry. Quoting experts, it said 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 as 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's modernisation through incorporation of appropriate technology is all the more important as global competition will spare no effort 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 a 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. Supportive government policy for 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 to upgrade skills is important, more important is the need to energise it by facilities for large-scale technology upgrading which 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 declaration, a couple of years ago, 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.