THE light engineering sector has failed to tap into local and global potentials due to faulty policies of the government. The government has announced light engineering goods as Product of the Year for 2020 but unrealistic tax structure is impeding the growth of the sector. Sector leaders identified lack of proper policies, shortage of funds and technology as the key challenges the light sector is grappling with. The light engineering sector could save and earn foreign currency through producing machinery as Bangladesh is dependent on imported capital machinery.
Manufacturers are losing competitiveness due to high tariffs on raw material import whereas import duty on finished products is 1 per cent. Despite the huge potential for growth, the sector has been struggling for lack of capital, technology training, planned industrial zones and policies conducive for the industry. Globally, light engineering is the life-line industry as the success of big industries always depends on this sector but our policymakers are not trying to realise the importance of light engineering for industrialisation. Experts said if we can support the light engineering sector properly, the backward and forward linkages would be cheap for the main industries in the country and the sector will be the import substitute.
There are about 50,000 factories with six lakh employees in the sector and the sector can become the main export sector if the government provides the proper policy support. The sector is providing machinery and spares to the agricultural, marine, textiles, jute mills, tea, construction, bakery, metal industry, paper mills and automobile sectors. According to the sector leaders, the country’s light engineering product export stood at $688.84 million in the financial year 2016-17 but the export has been on the decline in recent years due to unfavourable policies with earnings plunging to $319.74 million in FY19. The domestic market for light engineering products and services is about Tk 50,000 crore, while the country imports light engineering products worth Tk 29,000 crore annually.
Small entrepreneurs had developed the sector with investments worth $15 billion while financing from the government was completely absent in the sector. The government should extend the facility of the Bangladesh Bank’s Equity and Entrepreneurship Fund to the sector. Establishment of raw material and cutting-tool banks and an international standard testing centre are must to tap into the potential of the $6-trillion global export market.
